Momentum on the real side of the economy would mean curbing rampant joblessness in many southern-European nations. It would mean a stable, falling debt load for Greece, and successful financial reform in Spain. And it would mean strength in the manufacturing industry, which has been in contraction for 16 of the past 17 months.
Chris Williamson, chief economist at Markit, which compiles the PMI report, echoes the sentiment of European officials when he frames the situation as a slowing contraction. Aside from the PMI, he said that “forward-looking indicators — such as business confidence and the new orders-to-inventory ratio — also suggest that the rate of decline will continue to slow in the coming months.”
Williamson is looking at the first half of 2013 for a return to growth, but others are not as optimistic. Automotive industry officials have pegged the middle of the decade for a turnaround in the car market. Draghi himself is looking at the second-half of 2013 for positive numbers.
“We can have a positive development if national governments persevere in their actions both in fiscal consolidation but also on the front of structural reforms,” he said at Davos. “To say the least, the jury is still out.” His comments are punctuated by the threat of a triple-dip recession in Britain at the start of 2012, and contraction in Germany and France, two of the region’s largest economies.
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