Tentative signs of eurozone recovery

Although the 16-member euro area is still very much in the throws of its worst recession since World War II, some positive data suggest the end may be in sight.

The purchasing managers' index – an indication of future activity in the areas of services and manufacturing – jumped from 38.3 to 40.5 points in March, giving rise to hope that the green shoots of recovery seen elsewhere in the world may be spreading to Europe.

The new figures, compiled by research group Markit and released on Thursday (23 April), are still well below the 50-point threshold that marks an increase in economic activity.

But the new data for March show the rate of economic decline has slowed to the lowest level seen in the last six months and exceed economists' prior predictions of a rise to 39 points.

Analysts responded positively to the news.

"The first signs of improvement in eurozone business cycle are starting to emerge," said economist Marco Valli at Italian bank Unicredit reports AFP.

The welcome news comes after gloomy predictions from the International Monetary Fund on Wednesday that the euro area is fairing worse than the US and is set to contract by 4.2 percent this year and 0.4 percent in 2010.

Industrial orders

The EU's statistics office, Eurostat, released new figures on Thursday showing a fall in industrial orders for the euro area in February of 0.6 percent compared to January levels.

The modest decrease compared to January's drop of two percent has added to feelings that the eurozone's recession may be bottoming out.

However, the fall in industrial orders of 34.5 percent when February 2009 is compared to February 2008 highlights the huge decrease in economic activity experienced in the zone over the last year.

Also on Thursday, good news in France, where the Insee statistics office reported a rise in business confidence, was mixed with caution from Germany where leading economists said the euro area's largest economy would continue to contract until a least the middle of next year.

The report by four leading economic institutes said Germany's reliance on exports would delay its recovery compared to other euro area countries and that rises in unemployment this year would create added pressure on domestic consumption, which so far has held out.