Improved demand boosting eurozone manufacturing


Tue, Sep 24, 2013 - Page 15

Euro-area services and manufacturing growth accelerated to the fastest in more than two years this month as demand improved.

A composite index based on a survey of purchasing managers in both industries rose to 52.1 from 51.5 last month, London- based Markit Economics said yesterday.

Economists forecast 51.8, based on the median of 25 estimates in a Bloomberg News survey. The gauge has now been above the 50 level that divides expansion from contraction for three months.

The economy of the 17-nation region is showing signs of recovery since emerging from its longest ever recession in the second quarter. Growth is being led by Germany, where German Chancellor Angela Merkel won an overwhelming endorsement from voters in an election on Sunday on her handling of the eurozone crisis.

“The underlying trend is one of slow progress for the euro-zone as a whole,” Philip Shaw, chief economist at Investec Securities Ltd in London, said before the data were released. “In recent months, PMIs have signaled the emergence of the zone out of recession.”

The euro-region services index rose to 52.1 this month from 50.7 a month earlier, according to the report, while manufacturing declined to 51.1 from 51.4.

“Higher levels of business activity were driven by faster growth of new business,” Markit said. “New orders increased for the second successive month in September, growing at the fastest rate since June 2011.”

In Germany, Europe’s largest economy, a services measure surged to 54.4 from 52.8, exceeding the median forecast of economists in a Bloomberg survey. A factory gauge fell to 51.3 from 51.8.

The French manufacturing index slipped to 49.5 from 49.7, while services strengthened to 50.7, a 20-month high, from 48.9.

Economists in a Bloomberg survey this month forecast that the euro-region economy will grow 0.2 percent in both this quarter and the last three months of this year.

While the European Central Bank earlier this month raised its eurozone economic projection for this year, it still sees a 0.4 percent contraction and expects only a “gradual” pickup in activity.

“I’m very, very cautious about the recovery,” ECB President Mario Draghi said on Sept. 5 after policymakers kept the benchmark interest rate at a record low of 0.5 percent.

While the recovery remains weak, confidence is improving. Sentiment among households increased to minus 14.9 this month, the highest level since July 2011, from minus 15.6, the European Commission said in a preliminary report on Friday last week.

A combined measure of executive and consumer sentiment probably rose to the highest in two years, economists said before a report due on Friday.