The euro zone is starting to come alive. Little by little, macroeconomic indicators are showing that the region is heading in the right direction by creating jobs and growth. Yesterday the PMI index on business activity in the euro zone was updated. We saw that private-sector business reached a three-year high in April and moved from its March level of 53.1 points to 54 points, which suggests that growth ramped up in Q2.
Although Germany is spearheading the growth, the best part of the news is that peripheral European nations are also doing well economically and creating jobs. The recent data suggests that the recovery can sustain itself and leaving behind the risk of continual deflation that is dampening growth and job creation. Further, it looks like Europe is starting to fix its sovereign debt problems. Portugal is the latest example. After asking for a bailout three years ago, it was able to issue 750 million euros in 10-year bonds at a 3.57% interest rate, which is the lowest rate it has been able to secure since 2005. Overall, the peripheral economies are doing their jobs, and investors are noticing.
Brussels has approved Rajoy and team's accounts for the 2013 budget year. 2014 will be another tough year, but the economic environment is expected to be more favorable. Guindos said yesterday that GDP will rise 1.5% between mid-2014 and 2015. Spanish leaders and other voices from Europe need to wrap up pending reforms, without losing focus during elections, in order to drive home the recovery hammer.
