Improvement continues day after day in the euro zone, seen by the stellar news recently released, showing that the economy is on the right track and that the worst is over. After the expansion signaled in the third quarter; the economy is on its way toward recording further expansion in the last quarter of the year.
The 16-nation economy grew 0.4% in the 3 months ending September, compared with 0.2% contraction in the second quarter and 2.5% contraction in the first quarter. The strong monetary interventions by the ECB to stall the deterioration, managed in giving an impetus to the economy. Borrowing cost was cut to 1% and 60 billion euros were dedicated for purchasing bonds to enhance spending.
Today's data is providing evidence that the progress is ongoing; as PMI manufacturing for November advanced reading rose to 51.0 from the previous 50.7; meanwhile, PMI services also climbed to 53.2 higher than the previous 52.6. Accordingly, the PMI composite jumped to 53.7, the highest in 2 year yet better than the prior 53.0.
PMI manufacturing is showing further expansions in the fourth quarter, lifted by the largest two economies in the euro area. Germany's PMI manufacturing for November inclined to 52.0, higher than the prior 51.0; while PMI services surged to 51.5 from 50.7. In France, PMI manufacturing came in at 54.2, lower than the advanced 55.6; while PMI services soared to 60.4, higher than the advanced 57.7.
Trichet previously announced that the economy will gradually recover, and growth will appear in the second half of the current year; where he expects the GDP to improve on the quarterly basis.
Some economists expect the economy to fully recovery in 2010; however, there is no rush to unwind stimulus measures as the economy is gathering strength. The OECD mentioned that the ECB may keep the interest rate unchanged till the end of next year, where it will reach 2% by the end of 2011.
Demand on goods and services have improved recently with recovery signs appearing in world economies, especially in China which is expected to lead global recovery. Earnings by companies are showing that demand returned again on commodities; Puma, the second largest sportswear, anticipates profits in the fourth quarter.
The ECB said November that the European economy will grow 1 percent in 2010, higher than the previous projections of 0.3%; while this year, the economy may contract 3.9% instead of 4.5% contraction expected in August.
After the news the euro slightly changed against the dollar, while it is currently continuing its gains traded at 1.4969 recording a high 1.4990 and a low of 1.4831.
