New purchasing managers index (PMI) numbers out of the Eurozone confirm a recent string of data that show that the debt-laden economy is in a recovery.
The final Eurozone composite output index published by Markit climbed to 50.5 in July, up from 48.7.
Any reading above 50.0 signals expansion, and this is the first time the number has been above 50.0 since January 2012.
“The final Output Index reading of 50.5 confirms a welcome return to growth for the Eurozone economy at the start of the third quarter, raising hopes that the region can finally claw its way out of its longest-running recession,” said Markit’s Rob Dobson. “Granted, the euro area has experienced false dawns before, but the improvements in confidence and other forward-looking indicators warrant at least some optimism for the outlook this time around. Germany posted a return to expansion in July, while the downturns in the other big-four economies all eased.
“Manufacturing is leading the way out of contraction, with some nations benefitting from improved export demand. The real sparks which will hopefully ignite the recovery are the increasing signs of stabilisation in domestic markets. This not only aided manufacturers, but also pulled the service sector right back to the cusp of recovery.
“The labour market remains the main bugbear of the eurozone, as rising joblessness hurts growth and raises political and social tensions. But even here there was some better news, with the rate of job cutting easing to a 16-month low. With price pressures also relatively contained, the ECB will maintain its confidence that there are brighter skies on the horizon.”