Eurozone Recovery ‘Back on Track’ but Uneven Among Member States

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By Shane Croucher | December 16, 2013 10:43 PM EST

France is still seen as the "sick man of Europe" despite signs of a eurozone recovery afoot (Reuters)

The long-awaited eurozone recovery is "back on track" after private industry data suggests the single currency area saw its best quarterly performance for two-and-a-half years.

Markit's flash composite eurozone purchasing managers index (PMI) for December hit 52.1, up from November's 51.7 and rounding off the strongest quarter since the first half of 2011.

The closely-watched report uses manufacturing and services data from across the eurozone's 17 member states, compiled from surveys of purchasing managers. Any reading above the neutral 50 mark signifies growth.

After exiting the longest recession in its history during the second quarter, the eurozone recovery from its cataclysmic sovereign debt crisis slowed in the third quarter. This intensified fears that there were more troubles to come from the eurozone, with years of government austerity ahead and still unresolved reforms to the embattled financial sector.

"The rise in the PMI after two successive monthly falls is a big relief and puts the recovery back on track," said Chris Williamson, chief economist at Markit.

However, Williamson also warned that this signals just 0.2% growth for the fourth quarter, which suggests the recovery "remains both weak and fragile".

"The upturn is also uneven. Growth is concentrated in manufacturing, where rising exports have helped push growth of the sector to the fastest for two-and-a-half years, while weak domestic demand led to a further slowing in service sector growth," he said.

He also raised the alarm over the "unbalanced nature of the upturn among member states".

"France looks increasingly like the new 'sick man of Europe', as a second successive monthly contraction may translate into another quarterly decline in GDP, pushing the country back into a technical recession," Williamson said.

"In contrast, the December survey data round off a solid quarter of growth in Germany, in which GDP looks set to rise by 0.5%."

The eurozone economy expanded by 0.1% in the third quarter, according to figures from the Eurostat statistics agency, and by 0.3% in the second.

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