Businesses across the euro zone enjoyed a strong finish to 2013 as almost two years of job cuts came to an end last month, according to business surveys today.
Markit’s euro zone Composite Purchasing Managers Index (PMI), which gauges how thousands of manufacturing and services companies fare every month, rose to 52.1 in December from 51.7 in November.
That was unchanged from a preliminary reading two weeks ago and was comfortably above the 50 threshold for growth.
The survey showed new orders coming in at the fastest pace since June 2011, while the employment index hit the 50 mark for the first time in two years – meaning employers are now hiring as many staff as they are laying off.
While showing a fairly broad-based upturn across most of the euro zone’s major economies, France remained a laggard.
“Although consistent with a mere 0.2% expansion of GDP during the final quarter, the PMI signalled a strong turnaround in the health of the economy during the course of 2013,” said Chris Williamson, chief economist at PMI compiler Markit.
“Stronger growth looks likely for the first quarter of 2014,” he added.
With the labour market stabilising, Williamson pointed to the influx of new orders as a good omen for companies adding staff in 2014. The euro zone’s unemployment rate fell slightly in October to 12.1%, or around 19.3 million people.
Markit’s Eurozone Services PMI was also unchanged from the preliminary reading, although it slipped slightly to 51 from November’s 51.2.
Services companies, which range from banks to high street hairdressers, were nevertheless at their most optimistic about the next 12 months since July 2011.
Overall, the survey suggested the region looks on track to record modest economic growth in 2014, as suggested by Reuters polls of economists, even if France remains a worry.
“The upturn in the rest of the region may help bring about a return to growth in France, but the data are highlighting the need for structural reforms to bring about a more sustainable and robust recovery in the region’s second-largest economy,” Williamson said.