BLBG: Euro-Area PMI Surveys Signal Economic Activity Is Accelerating
Euro-area manufacturing and services activity strengthened in July in a sign that a recovery in the 18-nation region is gathering pace.
A Purchasing Managers Index for both industries jumped to 54 from 52.8 in June, matching a three-year high reached in April, London-based Markit Economics said today. That’s the 13th month the gauge has exceeded 50, the mark that signals expansion. Economists predicted an unchanged reading of 52.8, according to the median of 22 estimates in a Bloomberg News survey.
The increase in activity may be a first sign of confidence that a new round of stimulus introduced by the European Central Bank will be effective. With inflation running at a quarter of its goal and the economic recovery still weak, the ECB cut its deposit rate below zero last month and unveiled a targeted loan program to boost lending in the currency bloc.
“Business activity picked up again in July to suggest that the economy is growing at one of the strongest rates we have seen in the past three years,” said Chris Williamson, chief economist at Markit. At the same time, “growth is not fast enough to encourage firms to take on staff in sufficiently large numbers to have a meaningful impact on unemployment.”
Germany, France
The euro-area economy expanded 0.2 percent in the first quarter, and economists in a separate survey predict gross domestic product increased 0.3 percent in the three months through June.
Williamson said PMI data are consistent with growth of approximately 0.4 percent in the second quarter. A manufacturing index rose to 51.9 in July after 51.8 in June, while the gauge for services jumped to 54.4 from 52.8.
While France’s economy “is stagnating at best,” Germany’s “is growing at a robust 0.7 to 0.8 percent pace at the start of the third quarter,” Williamson said.
Services activity in Germany expanded the most in three years in July, jumping to 56.6 from 54.6 in June, Markit said earlier today. In France, manufacturing contracted at the fastest pace this year, with the index falling to 47.6 from 48.2 in June.
Consumer-price growth in the euro area remained at 0.5 percent last month, compared with the ECB’s goal of just below 2 percent. Joblessness held at 11.6 percent in May, close to a record high. The European Union’s statistics office in Luxembourg will release fresh data on July 31.
To contact the reporter on this story: Stefan Riecher in Frankfurt at sriecher@bloomberg.net
To contact the editors responsible for this story: Patrick Henry at phenry8@bloomberg.net; Jana Randow, Angela Cullen
