Fx News and Analysis
December 14, 2012 @ 11:20 am

Euro zone PMI rises slightly but still indicates contracting economy

The preliminary reading of the euro-zone purchasing managers’ composite output index (PMI) ticked up in December indicating that the downturn in the currency bloc’s  economy has eased.

“The euro-zone downturn showed further signs of easing in December, adding to hopes that the outlook for next year is brightening,” said Chris Williamson, chief economist at Markit, in the release. “It looks like the downturn reached its fiercest back in October,” he said.

The composite PMI index rose to 47.3 in December from 46.5 in November, marking a nine-month high and beating forecasts for a rise to 46.8. The data is based on a survey of around 5,000 businesses across the 17-euro zone nations.

Despite an increase in the index, it still remains in the contraction phase. Any number below 50 indicates a contraction while a figure above 50 indicates expansion and growth.

The index has remained below 50 for all but one of the past 16 months. It could be said that the recession has deepened in the current quarter in the euro zone.

Meanwhile, the French PMI held below 50 for the 10th straight month. The manufacturing PMI ticked up marginally to 44.6from 44.5.

Germany’s manufacturing PMI was disappointing, giving a reading of 46.3 from the previous 46.8.

Euro fell against the dollar after the data disappointed markets.

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