After a lengthy period of stagnant growth and lackluster results, the gradual crescendo of improving economic data that's been coming out of Europe lately certainly commands attention.
As our resident expert of the European economy, U.S. Global Emerging Europe Fund (EUROX) Portfolio Manager Tim Steinle has been listing several economic indicators that were turning positive during the investment team's morning meetings. While our entire team keeps track of the economic data and political policies of all the developed G-7 and emerging E-7 countries in the world, Tim keeps his finger on the pulse of European countries.
I previously shared how economic releases have been beating expectations, as shown in the euro zone's spiking Citigroup Citigroup Economic Surprise Index. GDP is recovering too, with expectations that the year-over-year growth rate will significantly improve over the next year and a half.
Positive surprises and improving economic growth aren't the only indications that the region's economy is becoming healthier. Manufacturing appears to be on the mend. The latest reading of the purchasing manager's index (PMI) was at a two-year high and topped the 50-mark. This indication of expansion hasn't happened since July 2011. And, the PMI in Europe expanded at a faster pace than estimated.
Economic confidence in the region has also been rising. In July, it reached a 15-month high. Generally, when sentiment turns positive, businesses invest more and consumers spend more. We believe this improving confidence will potentially spur positive third-quarter economic growth and help the euro zone to exit its recession.
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