Euro-Area Recovery Gathers Speed With Only France as Laggard

The euro area’s recovery is proceeding at pace, with France being the only one of the region’s four largest economies to struggle.

A Purchasing Managers’ Index for the manufacturing and services industries in the 19-nation bloc unexpectedly rose to 54.3 in August from 53.9, London-based Markit Economics said on Thursday. That’s the highest level since May 2011 and exceeds an Aug. 21 estimate of 54.1. A reading above 50 indicates expansion.

Confidence in Europe’s economic revival has improved, particularly after Greece won a third bailout package that kept the country in the single currency. Nevertheless, China’s economic slowdown and renewed turbulence on financial markets had threatened to weigh on growth. The European Central Bank will present new forecasts later on Thursday.

“Although global economic worries have intensified in recent weeks, the calming of Grexit fears has led to an improvement in the business environment across the euro zone,” said Chris Williamson, chief economist at Markit. “Policy makers have little scope for complacency, however, as slower growth in the emerging markets and recent financial-market volatility as well as a stronger euro have the potential to hit the economy’s performance in coming months.”

PMI data indicate the euro-area economy grew at a pace close to 0.4 percent in the third quarter, according to Williamson. Spain recorded the fastest expansion among the big-four economies, and Germany and Italy also registered stronger output, Markit data show. A gauge for France, on the other hand, showed growth slowed to near stagnation.

In the euro area, incoming orders rose at a solid pace and job creation was close to the highest level in more than four years, according to the data. Output prices rose for the first time since March 2012.