The latest PMI surveys point to the eurozone finally exiting its long recession – but the ECB still needs to nurture growth
The latest news from the eurozone is as upbeat as it has been for 18 months. Snapshots of activity in the manufacturing and services sectors are consistent with the long recession in the single currency area – which has been entrenched for the past six quarters – coming to an end. If the evidence from purchasing managers is to be believed, Germany is looking good and France is clawing its way back to normality. A better performance by the eurozone's Big Two – accompanied by a lessening of recessionary pressure in Spain and Italy – should, with luck, eke out some growth across the region in the second half of 2013.
Analysts put the recent improvement down to the growth stimulus provided by the European Central Bank, the slower pace of austerity in 2013 compared with 2012, and the help that last year's pickup in the global economy provided to Europe's export-dependent economy.
So is this it? Are the PMIs (purchasing managers indices) proof that an end to Europe's misery is at last in sight? The good news is that Wednesday's report was no flash in the pan: the eurozone PMIs have been improving for the past five months. It is also encouraging that the pace of job shedding is easing, given that record unemployment has been a significant drag on activity.
That said, it's far too early to start celebrating. The PMIs have signalled many a false dawn in the past and even now are a long way from signalling that a period of solid growth has resumed.
What's more, the eurozone faces plenty of headwinds. Austerity programmes – despite being less severe – will continue to be a drag on growth; the latest figures for bank lending suggest that businesses are still struggling to get access to finance; and consumer spending will be held back by unemployment in excess of 12% and falling house prices.
As a result, the eurozone will need strong growth in the rest of the world economy if a recovery is to put down roots. Here, the news is not particularly encouraging. The US is growing modestly but the latest manufacturing PMI from China showed a fourth successive decline. Eurozone firms will find export markets challenging.
The ECB may conclude from these PMIs that no further action is needed to boost eurozone growth. That, though, would be a mistake. Further setbacks are likely over the next 18 months and recovery – if it comes – will take careful nurturing. Reported by guardian.co.uk 11 hours ago.
The latest news from the eurozone is as upbeat as it has been for 18 months. Snapshots of activity in the manufacturing and services sectors are consistent with the long recession in the single currency area – which has been entrenched for the past six quarters – coming to an end. If the evidence from purchasing managers is to be believed, Germany is looking good and France is clawing its way back to normality. A better performance by the eurozone's Big Two – accompanied by a lessening of recessionary pressure in Spain and Italy – should, with luck, eke out some growth across the region in the second half of 2013.
Analysts put the recent improvement down to the growth stimulus provided by the European Central Bank, the slower pace of austerity in 2013 compared with 2012, and the help that last year's pickup in the global economy provided to Europe's export-dependent economy.
So is this it? Are the PMIs (purchasing managers indices) proof that an end to Europe's misery is at last in sight? The good news is that Wednesday's report was no flash in the pan: the eurozone PMIs have been improving for the past five months. It is also encouraging that the pace of job shedding is easing, given that record unemployment has been a significant drag on activity.
That said, it's far too early to start celebrating. The PMIs have signalled many a false dawn in the past and even now are a long way from signalling that a period of solid growth has resumed.
What's more, the eurozone faces plenty of headwinds. Austerity programmes – despite being less severe – will continue to be a drag on growth; the latest figures for bank lending suggest that businesses are still struggling to get access to finance; and consumer spending will be held back by unemployment in excess of 12% and falling house prices.
As a result, the eurozone will need strong growth in the rest of the world economy if a recovery is to put down roots. Here, the news is not particularly encouraging. The US is growing modestly but the latest manufacturing PMI from China showed a fourth successive decline. Eurozone firms will find export markets challenging.
The ECB may conclude from these PMIs that no further action is needed to boost eurozone growth. That, though, would be a mistake. Further setbacks are likely over the next 18 months and recovery – if it comes – will take careful nurturing. Reported by guardian.co.uk 11 hours ago.