Is the Euro Zone Finally Recovering?

While there are now a number of strong indicators that the euro zone is almost recovering from recession, there are still some shaky points and uncertainties for individual nations.

Index growth

One of the most significant measures of the economic growth or decline in the euro zone is Markit’s Eurozone Composite PMI, which measures activity across thousands of companies throughout the euro zone. The PMI result for January reached a 10-month high of 48.6, which still indicates economic contraction but is a move in the right direction from December’s reading of 47.2. If the PMI increases to over 50, it would indicate economic growth.

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A weaker France

The euro zone as a whole is turning around the decline, but not every member nation is faring equally as well. France — the bloc’s second-biggest economy — underperformed drastically. Where the euro zone as a whole saw the PMI reach a high point, France’s PMI reached a nearly 4-year low, with its services PMI falling below even those of Spain and Italy, to 42.7…

A stronger Germany and U.K.

Germany — the euro zone’s other powerhouse economy — had a significant leap in its PMI with the biggest monthly rise since August 2009. The increase brought Germany to a 1-and-a-half-year high of 54.4. The difference in recovery between Germany and France could pose trouble for the relationship between the nations. Fortunately, France may be able to turn things around further down the road, as France, Italy, and Spain all saw their rates of decline reduce slightly.

The U.K., which had been fearing a triple-dip recession, saw its services industry PMI rise and remain safely in growth values. Meanwhile, just across the water, the euro zone’s Ireland saw one of the best performances yet, reaching a PMI of 54.9 to top even Germany.

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