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Eurozone business activity rises but France lags: PMI data

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(Globalpost/GlobalPost)

Business activity in the 17-nation eurozone ticked up in December, but the recovery is uneven and weak French data of particular concern, a key survey showed on Monday.

Markit Economics' said its Eurozone Composite Purchasing Managers Index (PMI) for December rose to 52.1 from 51.7 in November.

"The rise in the PMI after two successive monthly falls is a big relief and puts the recovery back on track," said Chris Williamson, chief economist at Markit.

"The upturn means that, over the final quarter, businesses saw the strongest growth since the first half of 2011, and have now enjoyed two consecutive quarters of growth."

However, the growth is uneven, with France posting a fall for the second month running, while the EU's economic engine Germany powered ahead.

"It's the unbalanced nature of the upturn among member states that is the most worrying," said Williamson.

"France looks increasingly like the new 'sick man of Europe', as a second successive monthly contraction may translate into another quarterly decline in GDP (gross domestic product), pushing the country back into a technical recession," he noted.

"In contrast, the December survey data round off a solid quarter of growth in Germany, in which GDP looks set to rise by 0.5 percent."

Growth was also variable across sectors.

Manufacturing led the upturn with output rising for the sixth straight month.

For services however, the rate of growth slowed for the third consecutive month.

"There's little here to suggest that euro area policymakers need to increase their stimulus, but on the other hand the sluggish nature of the upturn adds to the sense that policy will remain ultra-accommodative for quite some time," Williamson said.

Capital economics analyst Ben May said however that latest figures "provide more evidence that the eurozone economy continued to grow at a feeble pace in the latter stages of the year".

"Accordingly, pressure will remain on the ECB to take more decisive action to support the economic recovery next year," he added.

Separate data released by the European Union showed that the eurozone recorded a trade surplus of 17.2 billion euros ($24 billion) in October, up sharply from 10.9 billion euros in September.

The 28-nation bloc meanwhile posted a surplus of 4.3 billion euros in October, reversing a deficit a year ago of 10.2 billion euros.

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http://www.globalpost.com/dispatch/news/afp/131216/eurozone-business-activity-rises-france-lags-pmi-data-0