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Eurozone on Road to Recovery, Key Index Shows

July 24, 2013
eurozone

The eurozone is on the mend economically, a key indicator released Wednesday showed, fueling hope that the currency bloc is recovering from its crippling debt crisis.

The London-based research group Markit said its closely watched Purchasing Managers' Index (PMI) for the region's manufacturing and service sectors rose to a higher-than-expected 50.4 points in July.

It is the first time since January 2012 that the index, which is based on a survey of about 5,000 companies in the eurozone, crossed back over the key level of 50 points - anything below marks a contraction.

"The best PMI reading for one-and-a-half years provides encouraging evidence to suggest that the euro area could - at long last - pull out of its recession in the third quarter," Markit chief economist Chris Williamson said.

The reversal "is being led by a broad-based upturn in manufacturing where growth surged to a two-year high," he noted.

The data gave markets a boost, with Germany's main stock index, the DAX, up nearly half a per cent to 8,352, its highest level since June.

"Today's better-than-expected PMI figures clearly support the notion that the eurozone economy as a whole is leaving recession behind," ING analyst Martin van Vliet said. "However, the return to growth will likely be slow and uneven."

He pointed for instance to the eurozone's high unemployment levels, weak housing markets and the fact that "fiscal policy will remain a drag on growth."

Another expert also warned against celebrating just yet.

"The PMI and other business surveys have signaled several false dawns in the recent past," said Ben May, an economist with the Capital Economics research group. "It is still too soon to conclude that the region is in recovery mode."




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Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH


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