Struggling Europe shows signs of recovery at last

Tim Wallace
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A RECOVERY could be in sight for parts of the Eurozone economy, as influential survey data yesterday showed growth in manufacturing output.

Figures from Markit also showed growth in the US, but falling output in China as the world’s second largest economy looks increasingly fragile.

The Eurozone’s purchasing managers’ index (PMI) came in at 50.4 in July, up from 48.7 in June and the highest level for 18 months.

A figure above 50 indicates growth.

Although the services sector is still shrinking with a PMI of 49.6, manufacturing output is rising with an index score of 52.3, a 25-month high.

The UK also saw further improvement last month – manufacturing output increased in the three months to July for the first time in a year, according to the Confederation of British Industry. And employment in the retail sector increased 3.7 per cent on the year according to the British Retail Consortium.

The US’ manufacturing PMI also score strongly with a growth figure of 53.2, up from 51.9 a month earlier.

However China’s manufacturing PMI slumped to 47.7, down from 48.2 in June and an 11-month low.

Europe’s economy is not by any means fixed – the European Central Bank (ECB) reported another big fall in bank lending, particularly to firms.

Net lending to businesses fell seven per cent in the second quarter, with banks tightening credit standards.

And French unemployment hit a new record high last month, with 3.28m people now jobless.

But economists are hopeful some good news is on the way.

“The data will provide a summer fillip to policymakers, especially in terms of there being light at the end of the tunnel for austerity-hit periphery countries,” said Markit’s Chris Williamson.