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5th Mar 2021

Eurozone edging towards economic recovery

  • Heading back to growth? (Photo: Images of Money)

The eurozone appears to be edging towards economic recovery, according to data published on Wednesday (24 July).

Statistics firm Markit revealed that its purchasing managers' index (PMI), which measures economic conditions based on data from thousands of companies, hit its highest level in 18 months in July.

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It rose to 50.4, up from 48.7 in June, driven by increased output from private sector companies in France and Germany. It is the first time that the index has cleared 50, which marks the tipping point between recession and growth, since January 2012.

Manufacturing data was particularly encouraging.

Data from Germany, the bloc's largest economy, indicated that the country's traditionally strong manufacturing sector rose to 52.8 from June's 50.4, the strongest reading since February this year.

Meanwhile, France's manufacturing sector also came close to posting growth, with a PMI of 49.8 (up from 48.4 in June), itself a 17-month high. The news has prompted the Bank of France to project that the country's economy grew by 0.2 percent in the second quarter of 2013, potentially bringing an end to its recession.

However, unemployment in France hit a record high in June, according to statistics also published on Wednesday.

The country's jobless total rose by 0.5 per cent to 3.279 million, an increase of 14,900 people from May, in news that deals a blow to President Francois Hollande's pledge to reduce unemployment by the year's end.

Hollande is coming under increasing pressure from Brussels to bring down France's budget deficit and shake up its labour market and from his governing socialist party to increase employment.

But unemployment tends to be a lagging economic indicator. Increases in business confidence and output are unlikely to be reflected in improved labour market figures for between three and six months.

EU bumps up growth forecast, amid jobless recovery

The European Commission has revised upwards slightly its growth forecast for the eurozone and the whole of the EU in 2011. However, the good news is tempered with the knowledge that the employment situation has remained effectively flat since last January.

Eurozone economic confidence rises

Economic confidence in the 17-nation eurozone rose in July reaching the highest point since April last year. But eurozone unemployment stays record high.

EU recovery "gaining ground", commission says

The EU's economic recovery will gather speed in 2014 and 2015, the EU commission has said, indicating that the worst of the economic storm which hit Europe is over.

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