Brussels, Belgium (4E) – Euro zone activity rose sharply in August to its highest level in 26 months as the currency bloc’s economy emerged from a long recession, according to a closely tracked survey released Thursday.
The “flash” purchasing managers index (PMI) of the euro zone rose to 51.7 in August from 50.5 in July, according to Markit, moving further up from the 50 level that draws the line separating expansion and contraction and rising for the fifth straight month. Germany, Europe’s largest economy, led the growth as new export orders increased, driving the composite PMI up to 53.4.
In a survey by the Dow Jones Newswires, economists predicted a 51 reading for August after the composite PMI moved into expansion in July, the first time in 18 past months.
France’s PMI fell to 47.9, though some forward-looking indicators show positive signs like improving manufacturing new orders and outlook in services. France’s gross domestic product (GDP) rose 0.5 percent in the second quarter while the PMI had an average reading of 45.4, showing that the composite PMI understates the French economy.
An encouraging sign is that output in the rest of the euro zone rose for the first time since May 2011, across both in the manufacturing and services sectors. Markit also said that domestic and overseas sales improved, further signs that both economies have become increasingly more competitive and are getting a boost from reduced fiscal pressures.