July 24 - Euro zone private industry has unexpectedly bounced back to growth but its fragile recovery runs the risk of being derailed as China's manufacturing engine slows. And as Hayley Platt reports some also fear countries could try and use the figures to mask deeper problems.
There's good reason for the French to be optimistic about the economy. After two year's of stagnation and rising unemployment, there are signs of an upturn. Manufacturing rose beyond expectations to just below the magic 50 mark that signifies growth. France's finance minister Pierre Moscovici was quick to declare the recession over. He told French radio the country must now work to transform this exit from recession into genuine recovery "Now we need to work to transform this exit from recession into a genuine recovery." But CMC's Michael Hewson remains unconvinced. SOUNDBITE: Michael Hewson, Markets Analyst, CMC, saying (English): "If you actually look at the average PMI readings for both manufacturing and services PMIs for France over the past 7 months, they've been low to mid 40s so I think he may be being a little bit premature there having said that this is the same country where Francois Hollande said the euro crisis was over so take that with a pinch of salt if you like." Across the euro zone the figures looked good. Markit's survey showed factories increased their output for the first time in over a year. Activity jumped to an 18-month high in July at 50.4. But it was the euro zone's biggest economy leading the way. Markit's Rob Dobson. SOUNDBITE: Rob Dobson, senior economist, Markit, saying (English): "In Germany, very important to the wider economic picture in the euro zone and if that's starting to grow again particularly manufacturing based cyclical then that's positive all round." The surveys will be welcomed by European policy makers . They've been under pressure to help the euro zone escape from the longest recession in its history. But there is one big fly in the ointment - recovery risks being derailed by a manufacturing slowdown in China.