Germany, Britain shine but Europe's recovery still fragile

Wed Nov 6, 2013 6:51am EST
 
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By Andy Bruce

LONDON (Reuters) - The euro zone's economic recovery lost a little momentum last month, according to surveys that showed only modest growth in German and French businesses.

Data from non-euro zone Britain impressed again, however, and German industrial orders jumped underlining the uneven nature of overall European recovery.

Wednesday's purchasing managers' indexes (PMIs) from Markit showed the pace of growth in euro zone businesses slipped last month, although not nearly as badly as first projections.

Taken as a whole, the indexes pointed to fragile economic growth that will do little to ease the pressure on the European Central Bank to take some action, although not perhaps at its policy meeting on Thursday.

With surprisingly low inflation last month, speculation in markets and among economists has grown that the ECB is primed to stimulate the economy again - perhaps next month.

"Our view is that rates will remain on hold tomorrow although we expect that ECB President (Mario) Draghi will 'disclose' that a rate cut was considered," said analysts at Rabobank, after the PMIs.

Financial markets also question what effect a straightforward interest rate cut would have given that rates are already at record lows.

Overall, the tone of the data on Wednesday were mixed. German industrial orders rose at a far faster pace than expected in September, but euro zone retails sales slipped more than predicted during the same month.   Continued...

 
A statue depicting European unity is seen outside the European Parliament in Brussels September 5, 2013. REUTERS/Francois Lenoir