New data show a sharp uptick in euro zone private sector activity, led by French and German manufacturing. But the labor market is still fragile
Private sector activity expanded in November by the fastest rate in two years according to an influential survey released on Monday (23 November), but signs of weaker growth to come have also appeared on the horizon.
The Purchasing Managers' Index (PMI) reading for the 16-member eurozone rose to 53.7 this month, up from 53 in October. The data is based on a survey of the bloc's business managers, with scores over 50 indicating an expansion in economic activity.
Produced by researcher group Markit, the figures show the growth in activity was largely driven by the manufacturing sector, with France and Germany proving to be the main engine.
The news marks the fourth consecutive month of expansion for the eurozone index, suggesting the bloc is heading towards positive overall growth figures for the last quarter of this year.
The area finally exited the economic recession in the third quarter (July-September) after it registered GDP growth of 0.4 percent.
However, signs that new orders may be slowing caused Markit's chief economist, Chris Williamson, to caution against over-optimism.
"We also saw the first signs of growth peaking, with the new orders index falling for the first time since it hit a record low in February," said Mr Williamson.
And continued high levels of job losses "highlighted the fragility of the recovery," he added.
The frail nature of the EU's labour market was also highlighted by a European Commission report on Monday that outlines the full extent of job losses since the financial crisis began last year.
The 2009 Employment in Europe Report says most of the employment increases achieved in the EU since 2000 have now been reversed.
Men, young people, the low-skilled and workers on temporary contracts have been the worst effected, with four million job losses in the union since the crisis struck.
As a result, over 22 million people were unemployed in the EU in September, the highest level for the population of roughly 500 million since comparable records began in 2000.
Although short-term measures such as reduced working hours have partially helped to limit job losses, the key to European job creation lies in the successful transition to the low-carbon economy, says the report.
The creation of 'green jobs', coupled with the loss of more traditional employment over the next decade, is expected to cause a major re-alignment in Europe's labour market.
"The underlying structural changes will involve re-allocation of workers across economic sectors and skill types," says the document regarding the impact of new policies to combat global warming.