Stabilisation of European activity suggests the recession could be over

New figures from Markit confirm that the Eurozone's order books are back to expansion. Beating economist predictions by a whisker, a composite purchasing manager's index number of 50.5.

Economists had forecast a rise to 50.4, from 48.7 last month.

Nations ranked by all-sector output growth (Jul):

  • Germany 52.1, 5-month high
  • Italy 49.7, 26-month high
  • France 49.1, 17-month high
  • Spain 48.6, 25-month high

The services sector approached stagnation, but remained below 50 (implying that the sector is contracting). The final number for the services sector came in at 49.8, a jump from 48.3 last month.

Howard Archer, chief UK and Europe economist, IHS Global Insight:

We believe that Eurozone GDP actually managed to stop contracting in the second quarter of 2013 after a record six quarters of decline as Germany saw faster growth and the rate of contraction slowed appreciably in Italy and Spain.

Rob Dobson, Senior Economist at Markit said:

The final Output Index reading of 50.5 confirms a welcome return to growth for the Eurozone economy at the start of the third quarter, raising hopes that the region can finally claw its way out of its longest-running recession.

Granted, the euro area has experienced false dawns before, but the improvements in confidence and other forward-looking indicators warrant at least some optimism for the outlook this time around.