Wednesday, 23 April 2014

It's spring time

Today's batch of business surveys paint a reassuring picture of the euro-zone recovery. Though better than nothing this was pretty sluggish last year, starting with growth of just 0.3% in the second quarter, which slipped to 0.1% in the third and 0.2% in the fourth; annualised, these rates were 1.3%, 0.6% and 0.9%. But the upturn seems to have gained momentum in early 2014, with Germany in particular having made a strong start to the year.

Today’s reports from Markit, a research outfit, suggest that growth may pick up even more in the second quarter, with output off to a brisk start in April. An index covering both manufacturing output and business activity in the services sector rose from 53.1 in March to 54 in April, the highest since May 2011. The jump was unexpected: the markets had anticipated a similar performance to that of March. A level above 50 indicates expansion; one below 50 indicates contraction.

The upturn in activity was led by Germany, whose own composite output index of services and manufacturing jumped from 54.3 in March to 56.3, the second-highest in nearly three years. Both services and manufacturing shared in the upswing and the outlook appears promising with business optimism high as consumer confidence picks up and foreign demand rises. By contrast, France seems to be stuck in a rut, with its overall index of output in services...Continue reading

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