Split in business surveys reveals two-speed euro

Julian Harris
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THE EUROZONE’S economy continued growing in November according to a widely-regarded set of business surveys released yesterday, yet crucial member states such as France and Italy appear to be stuck in the mud.

While Germany hit a 29-month high in Markit’s purchasing managers’ index – with a reading of 55.4 across all sectors of its economy – both France and Italy sunk to five-month lows. Their scores of 48 and 48.8 respectively point to economic contraction and the threat, for France, of another recession. Italy is already experiencing recession.

Scores above 50 indicate economic growth, a territory than Spain entered due to its reading of 50.8.

The numbers were largely influenced by differing fortunes among businesses operating in the service sector. Services firms in Germany saw activity jump, sending the sector’s PMI score up to 55.7 in November, from 52.9 in October.

Yet the French service sector declined, sinking to 48, while in Italy the survey’s headline number crashed from 50.5 in October to 47.2 last month.

“The survey suggests that the euro area region’s economy is on course to grow by just 0.2 per cent in the fourth quarter,” said Markit economist Chris Williamson, adding that this was on the condition that the results stayed stable in December.

“While the region is growing again, it is clearly a concern that the rate of growth remains so fragile.”