Eurozone recovery speeds up, activity at 27-month high

Eurozone business activity continued to pick up in September hitting a 27-month high that offered a fresh hope of recovery gathering pace, a key survey showed on Friday. The Composite Purchasing Managers' Index increased to 52.2 points in September after 51.5 in August, according to a second estimate by Markit Economics, which compiles the closely-watched survey. A first estimate had shown the index at 52.1 points. The index, considered a reliable leading indicator of the economic climate, has improved in each month since March, remaining above the 50-mark that signals expansion throughout the third quarter. This strengthens hopes that the eurozone is emerging from the longest recession in its history. "The final PMI confirms ... that the eurozone enjoyed its strongest quarter of expansion for just over two years in the first quarter," said Markit economist Chris Williamson. Though growth continues to be led by Germany, business activity picked up in France, Ireland and Italy showed signs of returning to robust growth, and even Spain stabilised. But while the survey "bodes well for ongoing growth in the final quarter of the year ... the region is by no means out of the woods yet" with growth remaining modest, Williamson added. Berenberg senior economist Christian Schulz noted that "Italy seems to finally live up to its potential" and added that after Prime Minister Enrico Letta's victory over Silvio Berlusconi "there is further upside potential for confidence in Italy." But he cautioned that "not all is well", notably on the jobs front. "Employment has not turned the corner yet according to the PMIs, suggesting that peak unemployment may not have been reached yet," Schulz said. Meanwhile the EU's Eurostat data agency said retail prices rose 0.7 percent in August against 0.5 percent the previous month