Thanks to positive growth measures, the economy of the euro zone for the past month grew at its fastest rate in three years. Specifically, the release of the monthly Purchasing Managers Index (PMI) was an ample measure to earn more confidence from investors in European economy.
The PMI of economic activity is measured by purchasing managers in the manufacturing and services private sectors. The PMI composite from all countries utilizing the euro rose to 54 from 53.1. This is above economists’ expected composite at 52.9. Germany was the frontrunner in the PMI, producing strong growth through accelerated output levels. The progression is also just two months short of a year of consecutive monthly growth, garnering attention from investors and reaffirming European Central Bank efforts. Credit agencies also showed growing confidence as they updated assessments and affirmed ratings on France, Italy, and Spain. This is also reflective in rising European stocks and a strengthening euro; encouraging more investors to spend in the market.
Another positive development is the improving economic conditions in Ireland, Portugal, and Spain, as well as the approaching stabilization of Greece. The recuperation of these countries has been an essential task for the European Union as they work to improve the overall European economy.
Despite these favorable perspectives, the European Union still has more work to do as they face the burden of stagnant unemployment rates and a suffering labor market. However, with the PMI growth increases, strong stock rallying, and the stabilization of burdened countries, the European economy continues its path of recovery, gaining more momentum.