Spanish, Italian Economies Show Signs of Life

Eurozone growth slowed in July, as the debt, financial, and unemployment crises continue to cripple the continents economy. Data released overnight showed that the European economy slowed in July from June ever so slightly. However, peripheral nations including Spain and Italy actually showed some signs of life.

The Eurozone Purchasing Managers Index (PMI) fell slightly in July to 44.1 from 45.1 in June. The slowdown in the economy could be due to seasonal issues as factories tend to shut down for summer breaks. Some countries were responsible for the slowdown more than others in the report. Spanish PMI unexpectedly rose in July from 41.1 in June to 42.3 in July on expectations of a 40.5 reading. The beat in Spain shows that the Spanish economy contracted less than expected in July and may indicate that Spain's economy may be able to escape the debt and unemployment crises that have caused it to slow.

Italian PMI also beat expectations in July, however the metric fell slightly in the month. Italy's PMI fell to 44.3 from 44.6 in June on expectations of a 44.2 reading. The smaller than expected drop could signal that Italy's large manufacturing sector could be rebounding. Even though Spain and Italy beat expectations, the news was not as good for Germany and France. Germany's PMI fell to 43 in July from 40.3 in June on expectations of a 40.3 reading and France's PMI fell to 43.4 from 43.6 in June on expectations of a 43.6 reading. Also, the UK PMI fell as well, falling an astounding 3 index points to 45.4 from a downwardly revised 48.4 in June on expectations of a 48.7 reading.

European equity markets seemed to shrug off the data on hopes that central banks are going to step up and ease further at meetings this week. English shares rose more than 1 percent on the extremely weak PMI on what can only be hopes of further easing from the Bank of England at its meeting Thursday. German and French shares also rose on hopes that the European Central Bank is going to step up its crisis fighting measures at its decision, also on Thursday. Spanish and Italian 10-year yields also fell, on hopes that the ECB is going to launch a plan to stabilize sovereign debt markets in Europe.