European services and manufacturing output strengthened in January, led by a “robust” performance by Germany, the region’s largest economy.
A euro-area composite index based on a survey of purchasing managers in both industries jumped to 50.4, a five-month high, from 48.3 in December, London-based Markit Economics said in an initial estimate released by e-mail today. Economists forecast a reading of 48.5, according to the median of 17 estimates in a Bloomberg News survey. A reading above 50 indicates expansion.
European finance ministers continue talks today on crafting a long-term fix to the region’s debt crisis after calling yesterday on bondholders to provide greater debt relief to Greece. While the turmoil has undermined the recovery, some measures of investor and consumer confidence have improved and European Central Bank President Mario Draghi has said 2012 will be a “much better” year.
German Surge
The euro erased its decline against the dollar after the report. It traded at $1.3056 as of 9:16 a.m. in London, up 0.3 percent from yesterday.
German manufacturing expanded in January for the first time in four months, according to a separate release from Markit. The nation’s factory gauge rose to 50.9 from 48.4 in December. The services index jumped to a seven-month high of 54.5 from 52.4 in December. The composite index of both industries also reached a seven-month high.
In France, manufacturing contracted at a faster pace this month, with an index falling to 48.5 from 48.9. The services measure rose to 51.7, a five-month high, from 50.3.
Growth in Germany may have come to a “standstill” in the fourth quarter, and “even slightly negative growth can’t be ruled out,” the Bundesbank said yesterday. Manufacturing “in particular has suffered from the slowing global economic dynamic and the disruption from the debt crisis in the euro area,” it said in its monthly report.
French Economy
Germany’s statistics office said on Jan. 11 the economy probably shrank about 0.25 percent in the final three months of last year. Spain’s central estimated yesterday that its economy shrank in the fourth quarter and forecast that it will shrink 1.5 percent this year.
The French economy probably shrank 0.2 percent in the fourth quarter and may shrink another 0.1 percent in the current three-month period, Insee forecast on Dec. 16. Euro-area industrial production declined for a third month in November, falling 0.1 percent from October, the European Union statistics office said on Jan. 12.
Still, consumer confidence in the 17-nation region unexpectedly rose this month. An index of household sentiment increased to minus 20.6 from a revised minus 21.3 in December, the Brussels-based European Commission said yesterday. Economists had forecast a drop to minus 21.4, the median of 25 estimates in a Bloomberg survey showed.
Alstom SA (ALO), the maker of power-equipment and trains, on Jan. 19 reported quarterly sales that fell short of analyst estimates. Still, the company forecast “marked progress” in fiscal fourth-quarter sales on growth in emerging markets.
The European Central Bank has cut interest rates twice since November and offered banks unlimited loans for three years to prevent a credit crunch.
