European Services, Manufacturing Contraction Eases, PMI Shows

Discussion in 'Wall St. News' started by ASusilovic, Aug 21, 2009.

  1. Aug. 21 (Bloomberg) -- Europe’s manufacturing and service industries contracted at the slowest pace in 15 months in August, adding to signs the worst recession in more than six decades is easing.

    A composite index of both industries in the 16-member euro region rose to 50 from 47 in July, Markit Economics said today. That was the highest since May 2008. Economists forecast a gain to 48, according to the median of 11 forecasts in a Bloomberg News survey. The index is based on a survey of purchasing managers by Markit and a reading below 50 indicates a contraction.

    Higher earnings at companies from Germany’s Deutsche Bank AG to Paris-based L’Oreal SA are adding to evidence of recovery after governments pledged billions of euros in rescue packages. The European Central Bank on Aug. 6 kept its key rate at a record low and said the economy is past the worst. The German and French economies returned to growth in the second quarter.

    “We expect the manufacturing industry to return to growth over the coming months while the services sector will lag behind,” said Christoph Weil, a senior economist at Commerzbank AG in Frankfurt. “The second half will show a strong economic expansion with significant gains in industrial output.”