Hopes that the Eurozone recession is coming to an end were reignited today by two positive data releases.
Strong German PMI figures were swiftly followed by equally upbeat ones for the 17-nation currency bloc. The Eurozone’s PMI for manufacturing came in at 47.5, a significant increase from December’s level of 46.1, and services PMI increased from 47.8 to 48.3.
Whilst both numbers are still below the 50 level which separates growth from contraction they show that contraction is occurring at a slower pace.
One economist noted: ‘The economy will probably embark on a path of ongoing moderate growth later in the year.’
But cautiousness remains. They further stated: ‘Part of the upward potential will be wiped out by ongoing fiscal austerity, wage cuts in some countries and rising unemployment, though these drags on growth should gradually become less severe.’
And certainly, whilst this latest data is certainly good news for the 17-nation currency bloc there are still a lot of issues to be tackled, as was highlighted by the most recent unemployment statistics for Spain.
Prime Minister Mariano Rajoy might have been expecting a gift, or at least a card, to celebrate the anniversary of his first year in office. Instead he got hit with the news that in the final quarter of 2012 the unemployment level in his nation rose from 25.01 per cent to 26.02 per cent.
According to figures compiled by the Madrid-based National Statistics Institute this now means that the number of jobless in Spain is in the region of 6 million people – a third of all the jobless in the entire Eurozone.
In light of this, and other recent indicators, it now seems increasingly likely that Spain’s economic struggle will continue for a sixth year.
One economist with Capital Economics Ltd in London commented: ‘The government’s forecast of a 0.5 per cent contraction this year is already looking way too optimistic. We predict a 2.5 per cent drop as the negative forces in recent quarters, including a dreadful labour market, persist.’
In a separate statement the Spanish government asserted that the nation’s recession worsened in the last three months of last year as a result of budget cuts.
So, although the Eurozone may appear to be getting back on track, it can only go so far whilst its most prominent members continue to suffer with such levels of economic instability.
As of 11:05 am
The Euro to US Dollar exchange rate is currently trading at 1.3323
The Euro to Pound Sterling exchange rate is currently trading at 0.8413
The Euro to Australian Dollar exchange rate is currently trading at 1.2685
The Euro to New Zealand Dollar exchange rate is currently trading at 1.5826
The Euro to Canadian Dollar exchange rate is currently trading at 1.3325
The US Dollar to Euro exchange rate is currently trading at 0.7502
The Pound Sterling to Euro exchange rate is currently trading at 1.1879
The Australian Dollar to Euro exchange rate is currently trading at 0.7880
The New Zealand Dollar to Euro exchange rate is currently trading at 0.6313
The Canadian Dollar to Euro exchange rate is currently trading at 0.7505
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