Eurozone economy stabilized this month

Eurozone economy stabilized this month
# 21 August 2009 15:54 (UTC +04:00)
Baku –APA-Economics. A closely watched gauge of economic activity across the 16-nation euro-zone private sector posted a record jump on Friday, as purchasing managers signaled that the region’s battered economy stabilized in August, MarketWatch reported.
The preliminary Markit composite purchasing managers’ index for the euro zone rose to a 15-month high of 50 in August from 47.0 in July. The record monthly jump exceeded economists’ expectations for a rise to 48.3.
A reading of less than 50 means a majority of managers reported a fall in activity, while a figure of more than 50 signals expansion. The August data ended a 14-month string of readings below the 50 mark.
"The further sharp rise in the euro-zone composite PMI index suggests that underlying economic conditions continued to improve markedly in August," said Ben May, European economist at Capital Economics.
Earlier Friday, stronger-than-expected PMI readings for Germany and France, the euro-zone’s two largest economies, contributed to a jump higher by the euro and European equities. The single currency traded at $1.4293 in recent action versus the dollar, a gain of 0.3%. See Europe Markets.
Data released last week showed euro-zone gross domestic product contracted by 0.1% in the second quarter, according to the statistical agency Eurostat, while Germany and France both returned to growth.
"PMI data are signaling that the unprecedented downturn has been followed by an historically rapid rebound that positions the euro zone to post growth of GDP in the third quarter," said Rob Dobson, senior economist at Markit.
Markit’s euro-zone services PMI rose to a 15-month high of 49.5 in August from 45.7 in July, while manufacturing PMI rose to a 14-month high of 47.9 from 46.3 in July. The manufacturing output index moved into positive territory, rising to a 15-month high of 50.8 from 49.4 in July.
But economists cautioned against any expectations for a robust rebound.
Rising job losses and the ongoing need for widespread and deep price discounting remain concerns, Dobson said. A sustained recovery in demand is needed for the rebound to gain traction, he said.
May said the data offered further confirmation the worst of the downturn is over and that the euro-zone economy is beginning to expand again, but warned that a "strong V-shaped recovery appears unlikely" amid fragile domestic demand and few prospects for a strong rise in near-term export growth.

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