Business surveys to be combed for hopes of economic rebound
By Alan Wheatley, ReutersLONDON--A raft of business surveys this week will be combed over for confirmation of hopes that a dire fourth quarter of 2012 marked the cyclical trough for the world economy.
February 19, 2013, 12:02 am TWN
An index based on questionnaires sent to eurozone procurement executives is likely to show activity is picking up, according to economists polled by Reuters.
The same goes for the closely watched monthly poll conducted by Germany's Ifo Institute and a barometer of confidence among U.S. housebuilders.
But the green shoots of recovery still have to push through stony ground. Notably, the eurozone's advance purchasing managers' index (PMI) for February is expected to remain below the 50 mark which separates expansion from contraction.
“The big picture should be one of gradual improvement, but let's not forget that both the PMI and the eurozone's economic sentiment indicator are at levels which have historically been consistent with contraction,” said Nick Kounis, an economist with ABN AMRO in Amsterdam.
Fiscal austerity, high unemployment, debt paydowns by households and weak bank lending all point to Europe's recovery being tepid in 2013.
What is more, a muddied outcome to Italy's general election on Feb. 24/25 could revive worries about the capacity of Europe's third-largest economy to reignite growth after more than a decade of stagnation.
That in turn could disturb the calm that has settled over the euro since the European Central Bank in September removed any immediate threat to the currency's survival by promising to act as a conditional bond buyer of last resort through its Outright Monetary Transactions (OMT) program.