The euro-zone economy may be near exiting its longest postwar recession but entering a period of stagnation or very weak growth at best, latest data suggest.
The closely watched purchasing managers survey for the euro zone rose to a 15-month high of 48.9 in June, adding to recent evidence that overall economic activity in the 17-country bloc could stabilize this summer after a continuous fall since late 2011.
Meaningful growth still isn't in sight, however. The PMI and other data indicate that any recovery in coming months will be too weak to halt the rise in unemployment in Europe or to alleviate the region's public- and private-debt burdens. In the PMI survey, which data company Markit compiles based on reports by purchasing managers at around 5,000 companies, scores below 50 signal falling business activity. Even June's improved reading thus points to a slight drop in euro-zone gross domestic product in the second quarter. But the pace of contraction is fading. Euro-zone GDP fell 0.9% in the first quarter, at an annualized rate, its sixth straight drop.
Germany's PMI rose 0.7 point to 50.9, signaling modest growth. France's score also rose but remained below 50.
Other surveys of business sentiment and industrial production have been more upbeat than the PMI, raising hopes that GDP will stop falling either this quarter or next, and grow at a slow pace by the end of the year. Euro-zone consumer confidence rose to a nearly two-year high in June, though it remained well below its long-term average, according to a report Thursday from the European Commission.
The hope among many Europeans is that stronger global demand will spur growth in export-sensitive Germany, which accounts for around 30% of euro-zone GDP. That, in turn, may boost exports from its European neighbors and provide an overall boost to business confidence.
But after 18 months or more of contraction, whether the bloc's GDP flattens or even expands a little bit is largely irrelevant for households and businesses, analysts warn: It will still feel like a recession, they say.
