Aug. 1 - French and Spanish car sales extended their decline in July and euro zone factory output is hit again as consumers cut back on costly goods in the face of economic uncertainty. Ciara Sutton reports.
France may be winning plenty of gold medals at the London Olympics, but its car industry isn't fairing so well. Car sales fell 7 percent in July. The slide for its major brand Peugeot, which is cutting more than 10,000 jobs and closing a plant, came despite a recent update to its popular 208 model. Spanish car sales also extended losses with a 17 percent drop, as consumers cut back on spending. Poor results from euro zone manufacturing and output is hammering home the scale of the region's economic crisis. Surveys of thousands of factories across the world showed activity in the euro zone contracted for the eleventh straight month. The purchasing managers index showed it worsened in Italy, Spain and Greece, and also in the region's two biggest economies - France and Germany. And the UK's PMI also plummeted to more than a three-year low. But Markit's Chris Williamson doesn't expect the decline to continue. (SOUNDBITE) (English) MARKIT, CHRIS WILLIAMSON, SAYING: "I think we will see some easing. This is much much weaker than people were expecting. Companies were reporting that there were extended holidays, more than longer summer shut downs probably relating to those extra bank holidays. The weather was awful as well which hit suppliers of materials to the construction industry and some retail sectors. We should see some alleviation of those pressures as we move through the third quarter." There was good news for some in the auto industry though. Germany's BMW posted its second-best quarterly profit, highlighting the growing divide between export-oriented premium auto makers and their ailing mass market peers. Ciara Sutton, Reuters.