Eurozone business activity again on upwards path

reding1  Business activity in Eurozone has being deteriorating for the past nine months. Last December however the PMI, index which measures this phenomenon, gave the first indications that the bottom of the dreadful U curve is now behind. In detail, the Purchasing Managers’ Index (PMI) for the industrial sector, being drafted on data over the demand for manufactured goods, stopped deteriorating and showed a first increase to 47.2 units in December 2012, from 46,5 in November. It must be noted that measurements of this index below 50 mean that the economy is in recession and above it in growth.Obviously PMI indexes for Eurozone remain in the negative region, but fortunately they stopped deteriorating for the first time after nine months. Germany is again spearheading the recovery of Eurozone’s economy, with the industrial PMI of this country at 50.3 points, just within the growth side again.

In the sector of services the relevant PMI index for Eurozone performed better than industry, reaching 47.8 points in December from 46.7 in November.

Policy measures

If the good news from industry and services, which constitute the powerhouses of Eurozone’s economy, continue during this current month of January, the new upwards path will consolidate the feeling that the policy measures taken by governments and the European Central Bank to overcome the fiscal and credit crisis, are on the right side. To be reminded that last December the EU Summit of the 17 Eurozone leaders has decisively supported Athens to solve its fiscal and sovereign debt problems. Given that the Greek tragedy has being for months the weak point for the entire Eurozone, this was a major breakthrough.

On the same line of effective policy decisions, ECB announced last October that it will support the prices of the Spanish and Italian sovereign bonds in the secondary market, using to this effect unlimited resources. The term “unlimited” was the magic word having restored investors’ trust in Eurozone’s debt paper.

Lower borrowing cost

During the first days of the New Year the yield of the Spanish 10 year bond fell below the psychological benchmark of 5%, after having reached the unsustainable level of 7% some months ago. On the same line Italian bonds pay now returns close to 4% in relation to 6.5% a few months ago, while France and Belgium now can borrow at interest rates close to 2%. With inflation slightly above 2% such interest rates are actually negative.

All those policy measures have not only restored confidence that Eurozone will soon return to an upward growth path, but they have also supported the parity of the euro with the dollar and greatly helped stock markets all over the world to regain lots of grounds. By the same token developments in the bond market have justified the draconian fiscal measures taken in Italy and Spain, drastically reducing borrowing costs for both countries.

Luckily enough the first positive indications come now also from the real economy, with the good news from PMI indexes. Of course there are uncertainties Eurozone has to face up this year, like the Italian elections. However if the new Parliament in Rome turns out a viable government, preferably with Mario Monti in it, then the rest of the year will be predictably positive for Eurozone.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Chauvinism and xenophobia will lead to global assertiveness and more wars

Environmental labelling, information and management schemes are central to the circular economy

A Sting Exclusive: China’s Foreign Minister Wang Yi on South China Sea issue at the ASEAN Regional Forum

Inequality triggered protests across Latin America. Here’s how the youth can help

Why saving our forests should be a global priority

UN condemns deadly simultaneous terrorist attacks on military camps in Mali

The EU-US trade agreement, victim of right-wing extremists and security lunatics

Yemen agreement to end southern power struggle ‘important step’ towards peace: UN Special Envoy

Killing of Egyptian peacekeeper in Mali ‘may constitute war crimes’ Guterres warns, urging ‘swift action’

The undead banks

Finland has just published everyone’s taxes on ‘National Jealousy Day’

5G in Russia: a local and global view on the way forward, in association with The European Sting

President Juncker temporarily transfers portfolio responsibilities following departure of two Members of the European Commission

The great sustainable reset: The new world of work after the pandemic

Progress toward sustainable development is seriously off-track

Energy security: The synchronisation of the Baltic States’ electricity networks – European solidarity in action

Deepening Europe’s Economic and Monetary Union: Commission takes stock of progress

What COVID-19 tells us about the changing nature of disaster risk

How technology can help us achieve universal healthcare

‘Emulate his example’ urges UN chief as world celebrates Nelson Mandela: a ‘global advocate for dignity and equality’

Generalist practicing: is it worth it?

Royal Navy to unveil future surveillance and reconnaissance requirements next February in Rome

French Prime Minister passes Stability Program and takes his ‘café’ in Brussels this June

4 myths about manufacturing in the Fourth Industrial Revolution

‘Action and tangible progress’ needed to finally ‘win the peace’ for Syrians: UN envoy

British PM May’s Brexit proposal remains obscure while her government unravels

Estonian Prime Minister Ratas: Europe is a thought that must become a feeling

Coronavirus could worsen hunger in the developing world

18th European Forum on Eco-innovation live from Barcelona: What’s next for eco-labelling?

Antitrust: Commission seeks feedback on commitments offered by Broadcom concerning TV set-top box and modem chipset markets

India is a latecomer to AI. Here’s how it plans to catch up

Mobile 360 Series – Russia & CIS: Empowering the Digital Economy

Monday’s Daily Brief: WFP mulls ‘last resort’ Yemen aid suspension, top peacekeeping awardee announced, abuzz over Bee Day, Ebola threat ‘very high’

5 libraries doing innovative things to help their communities

World Summit Awards 2016: Sustainable impact through digital innovation

‘Let the children live’: UN prepares to ramp up food aid to Yemen as famine risk grows

Brain Drain remains a crucial and unresolved issue

Nearly half a billion people can’t find decent work; unemployment set to rise: new UN labour report

How many more financial crises in the West can the world stand?

Fighting cybercrime – what happens to the law when the law cannot be enforced?

6 innovative technologies about to transform our infrastructure

EU on track to end use of chemicals harming the ozone layer

A roadmap for destination management in the digital economy

Brands can be a force for good and for growth. Here’s how

China’s Ambassador to the EU Zhang Ming wishes to Brussels a Happy 2019 Year of the Pig

Telemedicine can be a COVID-19 game-changer. Here’s how

What are the greatest global health threats?

Can fighting climate change bring the Arab world closer together?

How to make primary healthcare a favourable career choice for medical students: strategies and reflections

Shanghai has tough new recycling rules – and it will stop collecting trash from communities that don’t comply

‘Everyone must be on board’ for peace in Central African Republic: UN’s Lacroix

VW diesel scandal and climate change: can increased independent car checks lead to cleaner mobility?

EU to Turkey: No other ties than €3+3bn to upkeep refugees

Rural women a ‘powerful force’ for global climate action: UN Secretary-General

The EU will always have a stable partner in Montenegro, says President Đukanović

Youth unemployment: think out of the box

Just transition in EU regions: support to people, economy and environment

Scientists in Sweden are studying the climate-cooling effects of spruce forests

These are the fastest trains in the world

Long-term EU budget: Parliament wants safety net for beneficiaries

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s