Forex News – European PMI improves slightly but still in contraction zone

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The flash PMI index on German manufacturing activity released today showed a slight improvement. The Markit Flash Germany Manufacturing PMI advanced to 48.1 from November’s 47.9.

Markit’s Germany Composite Output Index, a gauge of private-sector business activity in Europe’s largest economy, also expanded, to 51.3 from 49.4, during the period.

“December’s flash PMI reading for Germany is a step in the right direction, but not enough to rescue what has been a subdued final quarter of 2011,” said Tim Moore, senior economist at Markit.

The Markit Flash France Composite Output Index, based on around 85% of normal monthly survey replies, posted 49.8, up from 48.8 in November. That was its highest reading in three months, albeit still slightly below the 50.0 threshold

Any number below the key 50 level indicates contraction, and above 50 shows expansion. This is the fourth month that the indicator is below 50.

Meanwhile the Euro zone flash PMI index rose from 47.0 in November to 47.9, indicating an easing in the rate of decline for the second month in a row and the smallest fall in output for three months. Despite the easing in the rate of decline, the average index reading for the final three months of 2011 was the weakest since the second quarter of 2009, and consistent with a marked contraction in the euro area. A recession in the euro region still looks inevitable with the region’s periphery struggling badly.