Eurozone business sector activity in January logged the best statistics since mid-2011 suggesting that a fragile recovery is gaining momentum. Eurozone Composite Purchasing Managers Index (PMI), compiled by Markit Economics, is at its best – that is 52.9 points. The current number increased from 52.1 points at the end of last year thus logging the seventh month on rise. The January improvement was the fastest rate of growth for the index. PMI is among main economic indicators of private sector activity with values higher than 50 being considered as expansion.
According to Chris Williamson, chief economist of Markit Economics, current developments signal a promising start of the new year. He said that the rise in the index was mostly helped by manufacturing sector as services still lag behind. Mr Williamson also pointed out that manufacturing activity has been at its best for the last 32 months. Using the composite PMI index, one can see that Germany has logged its 31-month highest (55.5 points) while Spain’s manufacturing has been experiencing its best performance for 78 consecutive months (54.8 points). In contrast, France, whose business sector has been performing rather poorly for quite some time, had started to signal an improvement given its 48.9 points.
According to Mr Williamson, the figures suggest that the currency block could grow half a percent in the first three months of 2014 and if this were true, then 2014 outlooks of 1-percent growth rate would already look “somewhat conservative”. The fact that Europe’s recovery is slowly getting broad-based instead of being sustained only by Germany is definitely a positive signal. Yet, he warned that the expansion is still “all-too dependent” on manufacturing because services sector – although growing – is still vanquished to domestic demand in a number of EU countries.
