Eurozone upturn beats predictions
Print Edition
Business activity across the eurozone has picked up this month at a faster pace than expected, surveys showed yesterday.
This was led by Germany, which has benefited from growing demand for its exports.
Survey compiler Markit’s Flash Composite Purchasing Managers’ Index (PMI) bounced to 51.7 from last month’s 50.5.
It was the highest reading since June 2011 and beat all predictions in a Reuters poll whose median forecast was for 50.9. Readings above 50 signify expansion in activity.
While growth accelerated in the eurozone’s biggest economy, it was a different story in France, the bloc’s No.2 economy, which saw business fall as its economy went into a summer lull.
But Markit said the composite PMI, which surveys thousands of companies across the region and is used as an indicator of growth, pointed to a 0.2-0.3 percent economic expansion in the current quarter.
That is similar to a Reuters poll taken earlier this month that predicted growth of 0.2 percent this quarter.
“It’s looking good. If the eurozone is picking up then that bodes well for the global economy. The wobble in France is a bit of a worry, but hopefully will be corrected,” said Chris Williamson, Markit’s chief economist.
Support from Germany and France helped the 17-nation bloc escape from its longest recession on record last quarter, expanding a better-than-expected but still modest 0.3 percent.
The problem faced by the European Central Bank in trying to stimulate growth is still the heavily indebted south. But Williamson said manufacturing and services activity was improving in the periphery.
Despite the upturn, expectations among services firms dipped from July’s 16-month high and manufacturers reduced their workforce at a faster pace than last month.
“Job shedding in part reflects the need to keep costs down and remain competitive, but there is still some uncertainty about the outlook,” Williamson said.
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