The survey of purchasing managers by Markit, a data provider, suggested that Europe might be near the end of a prolonged slump that has pushed unemployment to record highs. But the recovery is likely to be slow and fragile, economists warned, and recession could persist in some southern countries.
Evidence also appeared Wednesday that a credit squeeze in the euro zone was easing. A survey of banks by the European Central Bank showed that credit for consumers was becoming more available for the first time since the financial crisis began in 2008. While credit for businesses remained tight, tentative signs indicated that lending could begin to recover within months.
“The recession in the euro zone seems to be coming to an end after two years,” Ralph Solveen, an economist at Commerzbank in Frankfurt, said in a note to clients. But he added that the upturn could be uneven, with some indicators continuing to fall. “Activity is still dampened by numerous problems,” he wrote.
The Markit index of economic output rose to an 18-month high of 50.4 in July, from 48.7 in June, preliminary figures showed. A reading above 50 is considered a sign of economic growth. The July figure was the first above 50 since January 2012.
European stocks rose after the survey was released. Benchmark indexes in Madrid, Paris and Rome all ended up more than 1 percent, and the euro gained slightly against the dollar.
The Markit index suggested that growth was increasing in Germany and that the recession was nearly over in France. Manufacturing was rebounding in both countries, perhaps aided by growth in the United States economy, which has increased demand for European exports.
Daimler, the maker of Mercedes-Benz cars, said on Wednesday that unit sales of passenger vehicles rose 9 percent in the second quarter, in part because of surging demand in the United States for models like its redesigned S-Class luxury sedan, and its net income more than doubled from the period a year ago.
The Markit survey showed that the French economy continued to contract over all, but more slowly, while manufacturing was growing again for the first time since February 2012. The data suggested that the French economy, the second-largest in the euro zone after Germany, was stabilizing and could emerge from recession soon.
In Germany, managers reported solid growth in manufacturing and services, raising hopes that the country could help haul the rest of the Continent out of its slump.
Markit did not issue separate data for other European countries, but an index of economic sentiment in the rest of the euro zone that was part of the report also showed signs of stabilization.
The various encouraging data mean the European Central Bank is probably not likely to cut the benchmark interest rate, already at a record low of 0.5 percent, when it meets next week. Unemployment, often one of the last problems to respond to economic growth, could be near its peak after reaching 12.2 percent in the euro zone, its highest.
Still, the region remains vulnerable. More than a quarter of workers are unemployed in Greece and Spain. Signs of slowing growth in China, which accounts for about 25 percent of European exports, also present a risk for the euro zone.
“An economic recovery is looming, which is encouraging,” Martin van Vliet, an economist at ING Bank said in a note, “but we still doubt whether the region is about to embark on a sustainable recovery.”
Article source: http://www.nytimes.com/2013/07/25/business/global/report-raises-hopes-for-euro-zone-recovery.html?partner=rss&emc=rss