This summer, headlines stated that the Euro Zone had emerged from its recession with .3% growth in GDP. It’s no cause for celebration, but an important signal that Europe is making progress in its recovery. Below are a few signs indicating Europe is improving:
- Manufacturing growth has improved in five countries, including Italy and Ireland.
- New orders and new exports have not been this high since May 2011
- Euro zone manufacturing purchasing managers index reached a 26-month high (highest since June 2011).
- Greece continues to lag relative to other European countries, but even it has hit a four year manufacturing high!
- Air freight is at the highest level since 2011.
What we are still waiting to see:
- This growth has not translated into new jobs… yet. Unemployment is still around 11% for all of Europe. (Austria has the lowest rate, 4.7% and Spain has the highest rate, 26.9%)
- National public debt in Europe has hit new highs this year.
- Germany and France are largely responsible for the improved economic situation, which masks the recovery efforts of the weaker economies (or lack of recovery).
We do not expect to see the economy come roaring back any time soon. The end of the recession is an important milestone to reach, but just a milestone. We feel that Europe’s economy will slowly improve for many months and struggle to overcome obstacles to meaningful growth.