The eurozone is on track for a sustained economic recovery according to a closely watched industry survey – but at the cost of a widening gulf between the German-led core and the struggling periphery.
The Markit purchasing managers’ index for the eurozone rose to 57.8 in April from 57.6 in March, well above the 50 mark that indicates economic expansion.
The score was the second-highest since June 2007, defying some economists’ predictions that rising energy prices and the prospect of a Portuguese bail-out would damp growth.
But like all recent economic indicators, the PMI data pointed to a growing divergence between countries such as Germany that are now well into their recovery from recession, and the likes of Greece and Ireland which face more uncertainty.
The survey of industry executives showed the most bullishness in France, which grew at its fastest rate in more than a decade, boosted by a strong services sector.
But outside the currency bloc’s two leading economies, growth fell to a three-month low.
“All in all, today’s better-than-expected PMI data suggest that the economic recovery in the eurozone as a whole remains little affected so far by the combination of fiscal tightening, high oil prices, a strong euro, and a lingering debt crisis,” said Martin van Vliet, economist at ING.
Concerns over austerity measures helped dent consumer confidence across the eurozone, which fell slightly from recent highs, according to a separate survey carried out by the European Commission.
The PMI survey results are consistent with gross domestic product growth of about 0.8 to 1 per cent per quarter, or a rate of about 4 per cent annually, according to analysts.
One sour note was that average prices for goods and services rose for the ninth consecutive month, with the rate of inflation nearing records set during the summer 2008 oil spike.
Economists said that the relatively buoyant growth data, paired with inflationary pressures, would strengthen the European Central Bank’s hand as it seeks to tighten monetary policy following a first round of interest rate rises earlier this month.
Last week, eurozone inflation data for March were revised up to 2.7 per cent, the highest annual rate in more than two years. Excluding volatile energy and food prices, the “core” inflation rate reached 1.5 per cent, up from its long-term 1 per cent average.
“The tone of the PMIs adds to the case for some further tightening from the ECB, certainly during the second half of this year,” said Mark Miller at Lloyds Banking Group.
Source: http://www.ft.com
The Markit purchasing managers’ index for the eurozone rose to 57.8 in April from 57.6 in March, well above the 50 mark that indicates economic expansion.
The score was the second-highest since June 2007, defying some economists’ predictions that rising energy prices and the prospect of a Portuguese bail-out would damp growth.
But like all recent economic indicators, the PMI data pointed to a growing divergence between countries such as Germany that are now well into their recovery from recession, and the likes of Greece and Ireland which face more uncertainty.
The survey of industry executives showed the most bullishness in France, which grew at its fastest rate in more than a decade, boosted by a strong services sector.
But outside the currency bloc’s two leading economies, growth fell to a three-month low.
“All in all, today’s better-than-expected PMI data suggest that the economic recovery in the eurozone as a whole remains little affected so far by the combination of fiscal tightening, high oil prices, a strong euro, and a lingering debt crisis,” said Martin van Vliet, economist at ING.
Concerns over austerity measures helped dent consumer confidence across the eurozone, which fell slightly from recent highs, according to a separate survey carried out by the European Commission.
The PMI survey results are consistent with gross domestic product growth of about 0.8 to 1 per cent per quarter, or a rate of about 4 per cent annually, according to analysts.
One sour note was that average prices for goods and services rose for the ninth consecutive month, with the rate of inflation nearing records set during the summer 2008 oil spike.
Economists said that the relatively buoyant growth data, paired with inflationary pressures, would strengthen the European Central Bank’s hand as it seeks to tighten monetary policy following a first round of interest rate rises earlier this month.
Last week, eurozone inflation data for March were revised up to 2.7 per cent, the highest annual rate in more than two years. Excluding volatile energy and food prices, the “core” inflation rate reached 1.5 per cent, up from its long-term 1 per cent average.
“The tone of the PMIs adds to the case for some further tightening from the ECB, certainly during the second half of this year,” said Mark Miller at Lloyds Banking Group.
Source: http://www.ft.com
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