Germany back to growth as December PMI raises hopes

Germany appeared set for a return to growth in December as wider eurozone business activity hit a nine-month high, a closely watched survey showed on Friday. The Purchasing Managers Index (PMI) Composite Output Index, a leading indicator compiled by the Markit research firm, came in at an preliminary 47.2 points for December, slightly down from an earlier estimate of 47.3 points. This was still up, however, from 46.5 points in November and edging closer to the 50 points boom-bust line although the reading overall remained in negative territory for an 11th successive month. The data offered "some hope that the eurozone is showing signs of lifting out of its deep double-dip recession," said Markit chief economist Chris Williamson, noting that "rates of decline eased in France, Italy and Spain while the economic situation stabilised in Germany." Germany posted a score of 50.3 points, an eight-month high, as Italy, France and Spain languished on 45.7, 44.6 and 43.9 points, respectively. Williamson said the results "at least bring some substance to the belief that the worst is over and that a return to growth is in sight for the region in 2013." However, he added: "The improvements in December are unlikely to prevent the eurozone economy having contracted at a sharper rate in the fourth quarter, and strong growth disparities are likely to persist for some time." London-based IHS Global Insight analyst Howard Archer said deep-rooted problems remain, "with incoming new business, backlogs of work and employment all still falling in December." He tipped a further contraction in the first quarter of 2013, with domestic demand still constrained by austerity policies, high and rising unemployment and limited consumer purchasing power.