The news that euro zone business activity expanded for the first time in 18 months in July has reinvigorated the question that analysts love to debate: is the European economy finally on the up?
Euro zone PMI (Purchasing Managers’ Index) data out on Monday suggested the area’s economy is slowly stabilizing. Markit’s euro zone composite PMI rose to 50.5 in July, from 48.7 in June. This was the first time since January 2012 that the PMI had risen above the 50-mark, and was aided by better numbers from peripheral nations such as Spain and Italy.
Spain’s service sector still shrunk in July, but at its slowest rate since 2011, increasing to 48.5 in July, from 47.8 in June. Activity in Italy’s service sector hit a two-year high of 48.7, far stronger than June’s 45.8 reading. Elsewhere, France’s service sector posted its best reading in 11 months, while the U.K.’s PMI came in at 60.2, its strongest level since December 2006.
Better data from the peripheral countries is something Ishaq Siddiqi, a market strategist at ETX Capital, focused on when he argued that Monday’s PMI numbers were a “definite turning point”.
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