Euro zone PMI numbers show new orders coming in at the fastest pace since June 2011. Markit's Eurozone Composite Purchasing Managers Index (PMI) rose to 52.1 in December from 51.7 in November. The Employment Index also went above 50 for the first time in two years. Investec Chief Economist Philip Shaw says that's a good start to the year, and euro zone growth could reach just a little above 1% by the end of 2014.
LONDON, ENGLAND, UK (REUTERS) -
JOURNALIST ASKING PHILIP SHAW: "Let's just stick with the PMIs for now. These are consistent with, I think, 0.02% GDP growth in Q4. It's not great but it's quite a robust turnaround, isn't it?"
JOURNALIST: "What are you seeing for 2014? What are you seeing for the first couple of quarters?"
SHAW: "Well pretty subdued stuff. We reckon that it will take time for growth to get momentum behind it through the course of this year. We are of the view that we should see growth somewhere a little bit above 1% for 2014 as a whole but with the first half of the year being relatively subdued, perhaps a little bit better than the second half of 2013. "
JOURNALIST: "Reuters put out an analysis piece on the Eurozone this morning entitled, "Reasons To Be Wary In 2014." I don't know if it's too pessimistic, I don't know if you've had a chance to see it. We'll run through some of these in a second, but what's your biggest fear for the Eurozone?"
SHAW: "Well it's difficult to isolate any specific fear and it's certainly true that there are always going to be fears and risks over the Euro area at this stage of the economic cycle. But they are an awful lot less than they were at the beginning of last year, let alone 2011 and 2012. I guess if there is one way, we're still fairly wary about Greece. Don't forget that the talks between the troika and the Greek government have stalled. We've now got Wolfgang Schaeuble back in the hot seat properly. So we ought to learn a little bit more about the outlook for Greece and a possible third bailout, et cetera over the coming weeks. "
SHAW: "Well we've heard about reform in France not just over the last year or so but on countless occasions over the past decades. And I remember looking at this issue back in, I think, it was 2005 that the big change now is that markets and investors are more aware of what the downsides are if countries don't reform their labor and product markets and leave their economies in a state of relative uncompetitiveness. So whether we get anything over 2014 much progress, I'm pretty skeptical. It's really much more of a longer term plan."