Recovery in eurozone speeds up but Germany is lagging
EUROZONE private-sector economic activity grew at its fastest pace for nearly two years in October, according to a new survey, but other evidence suggested Germany's recovery was starting to disappoint.
Purchasing managers' indices for the 16-country region showed output expanding for a third consecutive month and with the largest gain since December 2007.
Markit's Eurozone Flash Services Purchasing Managers Index, compiled from surveys of around 2,000 companies, leapt to 52.3 in October from 50.9 in September, its highest since February 2008 and dwarfing consensus expectations.
The unexpectedly strong results will boost hopes that the eurozone's recovery is being sustained, with continuing government and central bank emergency actions helping avert a slide back into recession.
But the strengthening euro is worrying policymakers and signs are gathering that the turnaround in Germany, the eurozone's largest economy, is losing momentum.
Employment
And even if anaemic economic growth is back, companies are still slashing jobs in a bid to cut costs. Markit's composite employment index for the euro zone remained firmly in contractionary territory.
"This is the one to watch," said Markit's Chris Williamson. "We need a stabilisation of the labour market to help sustain any recovery next year."
Other statistics showed industrial new orders in the eurozone rose more than expected in August, underlining expectations of a recovery in the third quarter and beyond.
And German business sentiment rose slightly in October to its highest level in over a year.
The Munich-based Ifo economic research institute said its business climate index, based on a monthly survey of 7,000 firms, rose to 91.9 from 91.3 in September, hitting its highest level since September 2008.
Separate PMIs showed activity continuing to expand in both Germany and France and the latter also reported a 2.3pc jump in consumer spending in September. (Additional reporting Bloomberg)
- Ailish O'Hora
Irish Independent
