August flash Markit PMI data shows eurozone recovery gathering pace

22 August 2013 10:47  [Source: ICIS news]

LONDON (ICIS)--The Markit flash eurozone purchasing managers’ index (PMI) for composite output in August reached a 26-month high of 51.7, showing the eurozone’s recovery from recession has gained momentum, Markit Economics said on Thursday.

Along with the composite output figure, which improved from July’s 50.5, the Markit flash Eurozone PMI for manufacturing also reached a 26-month high, moving up to 51.3 in August from 50.3 in the previous month.

The flash PMI manufacturing output figure for the eurozone, meanwhile – which is based on the question, “Is the level of production/output at your company higher, the same or lower than one month ago?” – hit a 27-month high of 53.4 in August, up from July’s 52.3.

Chris Williamson, chief economist at Markit, said: “The euro area’s economic recovery gained momentum in August, with manufacturing and service sector companies reporting the strongest pace of expansion for just over two years.

“So far, the third quarter is shaping up to be the best that the euro area has seen in terms of business growth since the spring of 2011. The economic picture from the surveys is therefore coming into line with policymakers’ expectations of a modest, yet still fragile, return to growth.”

The upturn, said Williamson, was being led by Germany, where growth accelerated again in August, driven in turn by rising domestic and export demand.

Germany’s flash composite PMI figure for August was a seven-month high of 53.4, compared to July’s 52.1. Its flash manufacturing PMI was a 25-month high of 52.0, against July’s 50.7.

Tim Moore, a senior economist at Markit and the author of the flash PMI report for Germany, said the latest data “provides confirmation that Germany’s economy is back on a solid footing and likely to remain in expansion through the third quarter of 2013”.

“Manufacturing was an especially bright spot in August, with the latest figures suggesting that a rebound in export orders helped output growth accelerate to its strongest for over two years,” he added.

Markit was less confident about the economic prospects of France.

“A big question mark still hangs over France’s ability to return to sustained growth,” Williamson said, in reaction to figures showing France’s flash composite PMI for August fell to a two-month low of 47.9 (any PMI figure below 50.0 signifies a contraction in output), from 49.1 in July, while its flash manufacturing PMI for August remained unchanged from July at 49.7.

“Although the French PMI is well above the lows seen earlier in the year, August saw a slight steepening in the rate of contraction, notably in services – which points to lacklustre domestic demand,” Williamson added.

Looking outside of France and Germany, Williamson said eurozone data flows continued to improve, suggesting that a long-awaited recovery seems to be taking shape in the periphery.

“Output and orders rose at the strongest rates since early 2011, with a broad-based improvement in domestic and export sales, suggesting that the recovery is also looking more sustainable,” he said.

($1 = €0.75)

By: Will Conroy
+44 20 8652 3214

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