Fresh mo­men­tum in 19-coun­try eu­ro­zone

The Star Early Edition - - INTERNATIONAL - PAN PYLAS

ECO­NOMIC growth across the 19-coun­try eu­ro­zone was even higher than pre­vi­ously thought dur­ing June, ac­cord­ing to a closely watched sur­vey yes­ter­day, in yet more ev­i­dence of mo­men­tum in the sin­gle cur­rency bloc.

Fi­nan­cial in­for­ma­tion firm IHS Markit said its main pur­chas­ing man­agers’ in­dex, which sur­veys both the man­u­fac­tur­ing and ser­vices sec­tors, was at 56.3 points in June. Though that is slightly down on the pre­vi­ous month’s 56.8 points, it’s well ahead of the pre­vi­ous es­ti­mate of 55.7 points. Any­thing above 50 points in­di­cates ex­pan­sion.

The av­er­age read­ing over the sec­ond quar­ter was 56.6 points, the best out­come since the first quar­ter of 2011. That, ac­cord­ing to the firm, in­di­cates healthy quar­terly growth of 0.7 per­cent, which com­pares favourably with most of the past decade and with the cur­rent per­for­mance of peers like the US.

Per­haps the most im­pres­sive as­pect of the sur­vey is that it’s broad-based and not just iso­lated to Europe’s big­gest econ­omy, Ger­many, which has borne the lion’s share of the re­gion’s growth since the global fi­nan­cial cri­sis. And with new or­ders to com­pa­nies ris­ing, em­ploy­ment is im­prov­ing.

“All four of the largest euro na­tions (Ger­many, France, Italy and Spain) are re­port­ing faster growth in the sec­ond quar­ter as a whole, adding to the pic­ture of an in­creas­ingly self-sus­tain­ing re­cov­ery amid ris­ing do­mes­tic de­mand in the sin­gle cur­rency area,” said Chris Wil­liamson, chief busi­ness econ­o­mist at IHS Markit.

Ac­cord­ing to the monthly sur­vey, which is one of the key in­di­ca­tors in­form­ing the in­ter­est rate de­ci­sions of the Euro­pean Cen­tral Bank (ECB), the ex­pan­sion was again led by the man­u­fac­tur­ing sec­tor, where pro­duc­tion rose at its fastest tick since April 2011.

Sep­a­rately yes­ter­day, the Euro­stat sta­tis­tics agency re­ported that re­tail sales across the eu­ro­zone rose by a monthly 0.4 per­cent in May. Though that’s still only mod­est, it does mean re­tail sales have risen for all five months this year. That counts for some­thing.

The mount­ing ev­i­dence of an eco­nomic re­vival in the eu­ro­zone sug­gests the ECB will at least start con­sid­er­ing how to ease up on its stim­u­lus mea­sures.

As well as slash­ing in­ter­est rates, in­clud­ing its main one to zero, the ECB has gone on a mas­sive bond-buy­ing spree in the hope of keep­ing a lid on in­ter­est rates in the mar­kets. – AP

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