Eurozone / UK surveys improving on schedule
Simon Ward
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Money supply-based optimism about Eurozone and UK economic prospects is supported by manufacturing purchasing managers’ surveys for May released today – the Eurozone and UK new orders indices reached their highest levels since June and March 2011 respectively.
Within the Eurozone, the Italian, Spanish and Greek surveys have recovered notably over the last two months – see chart below from data provider Markit. Further improvement is needed but this is consistent with the forecast that peripheral economies will return to growth in the second half of 2013.
The labour market will lag economic improvement but Eurozone unemployment may be close to stabilising. The net percentage of households expecting unemployment to rise has fallen since December 2012 and is now at a level that signalled a peak in the unemployment rate in 2010.
Current UK unemployment of 7.8% is already down significantly from a peak of 8.4% in late 2011. Labour demand appears to be picking up, judging from a strong May reading of the Reed job index, which measures online vacancies.
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