Eurozone’s economic decline may become milder
On 4 January, Markit’s Eurozone Composite PMI, which measures business activity across Euro area companies, rose in December to 47.2 from 46.5 in November. According to Reuters, December’s figure was the highest since March last year.
However, the PMI results show that Eurozone’s economy still contracts, as any PMI figure below 50, indicates contraction. In order to say that an economy grows, based on the Markit PMI, the index should be above average.
Chris Williamson, chief economist at Markit commented, “the surveys at least bring some substance to the belief that the worst is over and that a return to growth is in sight for the region in 2013…The surveys rose to multi-month highs in all four of the largest euro member countries, suggesting that rates of decline eased in France, Italy and Spain while the economic situation stabilized in Germany.”
Moreover, Markit survey indicates that the outlook for the first quarter of 2013 remains unclear. Service sector businesses that make up the bulk of the euro area’s economy became more optimistic for 2013. But, Eurozone Services PMI remains below 50, hitting a five-month high of 47.8.
In regard with the biggest economy in euro area, the German Federal Statistics Office announced that retail sales in Germany rose in November. Thomas Costerg, an economist at Standard Chartered Bank in London said to Bloomberg, “we are cautiously optimistic about German consumption growth this year due to above-inflation wage gains and lower savings…[however] we don’t expect a spending boom.”
According to Williamson, the total data for Eurozone’s economy suggests that the improvements in December are unlikely to prevent Eurozone’s economy sharp contraction in the fourth quarter of 2012, “and strong growth disparities are likely to persist for some time.” new europe on line
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