Monday, January 4, 2016

Economy: Europe - The Stealth Recovery

(Drivebycuriosity) - The stock markets started the year in a sour mood. It seems they totally overlooked stronger economic numbers from the Euro Area. There a Purchasing Managers’ Index for the industry rose to 53.2 from 52.8 in November: "For the first time since April 2014, manufacturing expanded in all nations covered including Greece" (acrossthecurve). This barometer signals that the Euro Area industry is accelerating - a sign that the whole economy is recovering.

The area is clearly benefitting from the drop of the Euro. The common currency lost more than 20% since last summer, making European exports more competitive on the global markets. The drop of oil and other commodity prices also creates a lot of tailwinds because consumers have more money to spend and companies lower costs. The massive stimulus program of the European Central also is a great help.

 I suppose that the tailwinds will continue in the coming months and we will get more positive surprises from the  Euro Area. Welcome back Europe.

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