Latest evidence from London-based research institute Markit Economics confirmed that the economy in the euro zone is stabilizing. The euro-area Composite Purchasing Manager’s Index (covering manufacturing and services) jumped to 50.5 in July from 48.7 in the previous month. The services PMI rose to 49.8 from 48.3, showing a further improvement, but remaining below the 50 growth/contraction line. The final reading was also above an initial estimate of 49.6.
Last week, PMI results showed that manufacturing in the 17-nation economy expanded at a faster pace than initially estimated in July as the industry resumed growth after two years of contraction. Rob Dobson, Senior Economist at Markit commented: “The final reading for July confirms a welcome return to growth for the euro zone economy at the start of Q3, raising hopes that the region can finally claw its way out of its longest-running recession. The improvements in confidence and other forward-looking indicators warrant at least some optimism for the outlook. 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.” Last week, ECB President Mario Draghi said that recent indicators signal the euro zone is past the worst of the slump and data “tentatively confirm the expectation of a stabilization in economic activity.”