Business activity in the Eurozone grew rapidly over the past month, reaching a 26-month high. New data from economic research group Markit indicates that Europe is recovering at a rapid pace after years of sluggish economic performance.
The composite purchasing managers’ index, known as PMI, rose from 50.5 points to 51.7 points across the Eurozone. PMI operates on a 0-100 scale in which 50 means a period of total stability, and anything above 50 represents stable economic growth.
Certain sectors of the Eurozone economy grew more rapidly than others, according to the Markit data. Manufacturing, for example, reached a PMI of 51.3 points –a 26-month high and an increase of one percentage point since the last study in July.
Services, the largest sector in the economic community, increased significantly from 49.8 to 51 over the past month. The service sector shrunk significantly in the wake of the financial crisis and is only beginning to find its feet as the economy grows.
Despite the positive growth throughout the Eurozone, certain markets fared better than others. Germany’s incredible economic growth allowed it to neutralise major contractions in markets such as France, which fell from 49.1 to 47.9 in August.
The disparity between different Eurozone countries indicates a mixed recovery that is taking place in Europe. Analysts have stated that Germany is leading the economy towards repair, while other markets are continually struggling to perform.
Economists have also warned that increasing numbers of employed people could be an issue for the Eurozone as a whole. Many businesses are reducing their amount of staff in an effort to reduce costs and return to profitability in tough conditions.
Despite the somewhat mixed nature of the recovery, stocks rose after the economic progress was announced. Markets in London and Frankfurt rose by one percent on the news, indicating a new sense of confidence in Europe.
