Euro-zone economic activity this month reached its highest level in more than two years as manufacturing output grew, according to a private sector study made public on Thursday, providing confirmation that a slow expansion is under way in the currency bloc.
A survey of purchasing managers conducted this month by Markit Economics, a data and analysis firm in London, pointed to a broad, though tentative, recovery in the 17 nations of the euro-zone. Markit’s composite output index rose in August to 51.7 from 50.5 in July, the highest in 26 months and above market expectations for a reading of about 50.9. A number over 50.0 indicates growth.
The data comes just a week after official data showed Europe breaking out of recession in the second quarter of the year, helped by a rebound in French and German household spending.
Markít’s index of manufacturing sector purchasing managers rose to a 26-month high of 51.3, up from 50.3 in July. A comparable survey in the services sector showed a rise in activity to 51.0, up from 49.8 in July, the highest in 24 months.
The world economy could well use a European economic renaissance at a time when global markets have been unnerved by signs of a slowdown in emerging markets and anxiety about the timing and impact of the U.S. Federal Reserve’s monetary stimulus policies.
Still, there is little sign that the tepid recovery will be enough to address the main problems weighing on the euro-zone, an unemployment rate at record levels and a crisis of confidence in public sector finances.
Once again, the largest European economy, Germany, led the way, with output expanding at its fastest pace since January, with manufacturing at a 25-month high, according to data from Markit.
Carsten Brzeski, an economist in Brussels with ING Bank, said Germany was benefiting from a combination of strong domestic demand and improvements across the European economy.
"It looks as if new growth hopes for the rest of the euro-zone are stimulating German confidence," he wrote in a note to clients, "which in turn could lead to higher German economic growth and could eventually become growth-supportive for the euro-zone."
French purchasing managers reported a contraction, with the index coming in at 47.9 in August compared with 49.1 in July. That suggests that France’s second-quarter growth spurt of 0.5%, or about 2% at an annualized rate, might prove a one-off affair.
