Euro-Area Recovery Set to Gather Momentum as New Orders Improve

Growth momentum in the euro area could pick up this month after new orders rose in October at the quickest pace in half a year, according to Markit Economics.

A Purchasing Managers’ Index gauging economic activity in the region climbed to 53.9 from 53.6 in September, the London-based company said on Wednesday. While that’s below an Oct. 23 estimate of 54, it’s well above the 50-point mark that divides expansion from contraction. A measure of new-order growth rose to 53.6 from 53.3

The economic recovery in the 19-nation region has so far proved resilient to a slowdown in emerging markets, even as a slide in energy prices and a stronger euro damp inflation. The European Central Bank will decide in December whether it needs to add to its 1.1 trillion-euro ($1.2 trillion) quantitative-easing program or cut record-low interest rates again.

“A small upturn in the rate of growth of new orders suggests that the upturn may gather momentum in November,” said Chris Williamson, chief economist at Markit. “But the pace of growth looks set to remain frustratingly weak given the amount of stimulus in play at the moment.”

The euro-area economy is on track for 0.4 percent growth in the final quarter of the year, the report showed. That’s the same rate as recorded in the three months through June and as economists surveyed by Bloomberg predict for the third quarter. The data for last quarter will be published on Nov. 13.

Output increases in both manufacturing and services signal a broad-based upturn, and rising backlogs of work indicate companies are struggling to keep up with demand, Markit said. Even so, inflationary pressures remain weak, with output prices falling for the first time in three months.

Spain remains the fastest-growing of the region’s four largest economies, with the PMI index suggesting a 0.7 percent quarterly expansion, compared with Germany’s 0.4 percent, Italy’s 0.3 percent and France’s 0.2 percent, according to the report.

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