Fri, Oct 04, 2013 - Page 15 News List

Services output up in euro area

Bloomberg

Euro-area services output expanded more than initially estimated last month, as the 17-nation currency bloc’s economic recovery gained momentum.

An index based on a survey of purchasing managers in the services industry rose to 52.2, exceeding a Sept. 23 estimate of 52.1 and up from 50.7 in August, London-based Markit Economics said yesterday.

The gauge has been above 50, indicating growth, for two months.

The latest services data come after the eurozone economy emerged from its longest-ever recession in the second quarter and economic confidence rose for a fifth month last month.

The jobless rate fell to 12 percent in July from a record 12.1 percent a month earlier, and held at that level in August.

At the same time, economists in a Bloomberg News survey see growth slowing to 0.2 percent in the third quarter after a 0.3 percent expansion in the three months through June.

Economists surveyed by Bloomberg predict the unemployment rate will peak at 12.3 percent by the end of this year before falling to 12 percent in 2015.

“The region is by no means out of the woods yet,” Markit chief economist Chris Williamson said in a report.

“Growth remains only modest. The eurozone PMI is consistent with GDP rising by just 0.2 percent on the third quarter, and the political instability that has reared up in Italy is a reminder that there remains plenty of scope for recoveries to be derailed,” he said.

Euro-area factory output expanded for a third month last month, though the index slipped to 51.1 from 51.4 in August, Markit said on Tuesday.

A composite index of activity in the manufacturing and services industries rose to 52.2, Markit said yesterday.

Markit’s survey helps explain why European Central Bank President Mario Draghi opted against doing anything more to shore up the recovery at Wednesday’s policy meeting.

Draghi spoke in Paris after the bank’s Governing Council left its main refinancing rate at a record low of 0.5 percent for a fifth month.

The decision had been predicted by all 52 economists in a Bloomberg News survey.

“Real GDP growth in the second quarter was positive, after six quarters of negative output growth, and confidence indicators up to September confirm the expected gradual improvement in economic activity from low levels,” Draghi said.

“The overall improvements in financial markets seen since last summer appear to be gradually working their way through to the real economy,” the ECB president said.

“We view this recovery as weak, as fragile, as uneven,” he said at a news conference.

Yet the bank took no action and left its benchmark interest rate unchanged at a record low 0.5 percent and shied away from any new stimulus measures, such as the credit offering.

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