Eurozone PMI Solidifies Recovery

The euro traded steadily above $1.33 on Friday morning after PMI data released on Thursday contributed to growing optimism in the 17-nation bloc. The Wall Street Journal reported that eurozone composite PMI increased from 50.5 in July to 51.7 in August. The jump was especially encouraging as it showed the region was moving further ahead of the 50 point benchmark that indicates growth. Not only did the data show a marked improvement from last month, but it beat out analyst expectations of 50.9. Germany led the region with a composite PMI of 53.4, which was attributed to a jump in new export orders. France's reading disappointed as its PMI fell to 47.9, which indicates contraction. However, analysts say it wasn't all bad for the eurozone's second largest economy; the nation's new orders rose and service expectations were positive. Many think the poor PMI score could be understating the resilience of the French economy. The data also showed that manufacturing and service sectors were even improving in peripheral countries, something the eurozone has struggled with. The European Central bank has been tasked with stimulating growth, but despite the measures taken, the effects of the bank's accommodative policies have failed to reach struggling countries like Spain and Italy. The improved PMI data is encouraging, and shows that even some of the eurozone's struggling south are improving. There were some dark spots in the data, particularly that manufacturers cut their workforce at a faster pace in August than in July. Eurozone unemployment is a huge problem for the region, and if companies are cutting costs to become more competitive, the problem will only grow.