Euro zone manufacturers rebounded back to growth for the first time since January 2012, according to Markit's flash euro zone purchasing managers index (PMI) released Wednesday, which measures European manufacturing and services output.
The PMI index rose to 50.4 for July, reaching an 18-month high and breaking the 50-point threshold, which marks the difference between private sector contraction and expansion.
The manufacturing sector in particular reported its largest monthly jump since June 2011. The ailing euro zone service sector notched its smallest decline in 18 months.
Germany’s output rose at its fastest for five months, with a strong service sector and job creation rebound. France’s steady decline in services and employment eased considerably.
The monthly results provide “encouraging evidence to suggest that the euro area could – at long last – pull out of its recession in the third quarter,” said Markit chief economist Chris Williamson in a statement.
A broad revival in manufacturing, alongside a stabilizing service sector, has somewhat offset higher unemployment, said Williamson.
The euro zone unemployment rate is 12.2 percent, according to Eurostat. The euro zone area has been in economic recession since the end of 2011.
The PMI is based on a survey of 5,000 companies in the euro zone’s manufacturing and service sectors.