Optimism builds for eurozone businesses
Source: Agencies |
February 6, 2013, Wednesday
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Print Edition
Print Edition
THE eurozone's embattled economy has turned a corner, according to a business survey yesterday that showed businesses are more optimistic about the future but highlighted a growing chasm between the region's economies.
Markit's Eurozone Composite PMI, which gauges business activity across thousands of companies and is seen as good gauge of growth, rose in January to a 10-month high of 48.6 from 47.2 in December - an improvement on the preliminary reading of 48.2.
While still signalling a contraction as the index has been below the 50 mark since February last year, it has risen consistently in the past three readings.
Private industry makes up nearly two-thirds of the eurozone's economy and, worryingly for policymakers, the data showed a widening chasm between Germany - Europe's largest economy - and France, the bloc's second biggest.
"The eurozone is showing clear signs of healing, with the downturn easing sharply in January and the region moving closer to stabilization in the first quarter," said Chris Williamson, chief economist at Markit.
"Growth is heavily skewed towards Germany, however, where the contrast with the contraction seen in France is the greatest seen since the survey began in 1998."
The economy likely contracted 0.4 percent at the end of last year, notching up its third negative quarter, and will only stagnate in the current period, according to a Reuters poll last month.
But on the whole the thousands of services firms surveyed, ranging from banks to restaurants, were at their most optimistic since last May, with the business expectations index jumping to 56.4 from 52.5.
That was the biggest one-month rise in the index since August 2009, just as the troubled bloc emerged from the previous recession.
Eurozone factories had their best month in nearly a year in January as burgeoning German output offered support, data released last week showed.
Still, firms across the 17-nation bloc reduced their workforce again last month and at the fastest pace in over three years.
Unemployment hit a record 11.7 percent of the working population in December, but inflation fell to a two-year low of 2 percent in January.
Markit's Eurozone Composite PMI, which gauges business activity across thousands of companies and is seen as good gauge of growth, rose in January to a 10-month high of 48.6 from 47.2 in December - an improvement on the preliminary reading of 48.2.
While still signalling a contraction as the index has been below the 50 mark since February last year, it has risen consistently in the past three readings.
Private industry makes up nearly two-thirds of the eurozone's economy and, worryingly for policymakers, the data showed a widening chasm between Germany - Europe's largest economy - and France, the bloc's second biggest.
"The eurozone is showing clear signs of healing, with the downturn easing sharply in January and the region moving closer to stabilization in the first quarter," said Chris Williamson, chief economist at Markit.
"Growth is heavily skewed towards Germany, however, where the contrast with the contraction seen in France is the greatest seen since the survey began in 1998."
The economy likely contracted 0.4 percent at the end of last year, notching up its third negative quarter, and will only stagnate in the current period, according to a Reuters poll last month.
But on the whole the thousands of services firms surveyed, ranging from banks to restaurants, were at their most optimistic since last May, with the business expectations index jumping to 56.4 from 52.5.
That was the biggest one-month rise in the index since August 2009, just as the troubled bloc emerged from the previous recession.
Eurozone factories had their best month in nearly a year in January as burgeoning German output offered support, data released last week showed.
Still, firms across the 17-nation bloc reduced their workforce again last month and at the fastest pace in over three years.
Unemployment hit a record 11.7 percent of the working population in December, but inflation fell to a two-year low of 2 percent in January.
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