- Frederik Ducrozet, an economist at Credit Agricole CIB
Another bright spot from Europe came out on Thursday, as activity in services sector expanded for the first time in 19 months, while the overall business activity grew at the fastest pace in 26 months, reinforcing a view the 17-nation economy is finally starting to gain momentum. A report from London-based Markit Economics showed that services PMI jumped to 51 in August, from 49.8 a month earlier, beating analysts' predictions of a 50.2 advancement. In addition to that, flash manufacturing PMI picked up to 51.3, compared with 50.3 in July, led by a strong improvement in activity in German manufacturing sector, where PMI hit 52.0 in August, following 50.7 points in July and reaching its highest level in 25 months. Meanwhile, the flash PMI Composite inched higher to 51.7 from 50.5 in the preceding month. Among other big countries, business activity in France, Europe's second largest economy, showed no change during August and still indicates a contraction, as manufacturing PMI stood at 49.7. The Eurozone gross domestic product expanded 0.3% in the three month through June, recovering from a six straight quarters of contraction. And even as the expansion was led by Germany and France, at least four European countries still remain in recession, including Spain and Italy. And the rising unemployment is still indicating there are continuing problems, which are needed to be sold before the bloc's economy will step on the path of sustain recovery.
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