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Uneven recovery in France and Germany but eurozone PMI rises
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Eurozone businesses ended the year on a high as new orders surged, but the chasm between a resurgent Germany and wilting France has widened this month, surveys showed yesterday.
Markit’s Flash Eurozone Composite Purchasing Managers’ Index, which gauges business activity across thousands of companies large and small, rose to 52.1 in December from 51.7 last month.
It was the second-highest reading since mid-2011 and beat the median forecast in a Reuters poll for 51.9. The index has been above the 50 mark that denotes growth for all the second half.
However, Markit warned that while the increase in growth was reassuring, the country-by-country breakdown of the data revealed a lopsided recovery, with France floundering and Germany steaming ahead.
“The rebound in the eurozone composite PMI in December makes for encouraging reading and may serve to sooth concerns about the sustainability of the recovery,” said Martin van Vliet, senior economist at ING.
“But we should not get too carried away either — the still-low level of the overall index is a firm reminder that this recovery is still very fragile and sluggish.”
The division between the eurozone’s two biggest economies was marked.
The French composite PMI fell to a seven-month low of 47.0 and signalled a steady fall in activity, while the same measure in Germany showed a solid growth to 55.2.
Markit said the data suggested the eurozone economy, which exited from its longest recession earlier this year, would grow around 0.2 percent this quarter, in line with a Reuters poll published last week.
New orders rose for the fifth month, hinting the recovery should go on into 2014.
Markit’s Eurozone Manufacturing PMI rose to 52.7 in December from November’s 51.6. That was its best showing in 31 months and smashed median expectations for 51.9. It was higher than all forecasts in a Reuters poll of 35 economists.
A gauge measuring manufacturing output soared to 54.8 from 53.1, a level not seen in more than 2 1/2 years.
As new orders for manufactured goods grew, factories were able to build up a backlog of work at the fastest pace since April 2011.
“This is very much a manufacturing-led recovery. It’s reflective of companies, especially in Germany, being more competitive and taking advantage of the upturn in global trade,” said Chris Williamson, Markit’s chief economist.
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