Euro-Zone PMI Hints at Recovery; Germany, France Post Growth in Private-Sector Output

The euro zone's private-sector output stabilized in August, marking the end of 14 months of contraction, with support from the 1st rise in mfg. output since May last year, data from Markit Economics shows. The flash reading of the euro-zone composite purchasing managers' index, closely watched gauge of private-sector activity, rose to a 15-month high of 50 in August from 47 in July, after the biggest monthly rise on record. The data indicate euro zone's private sector is on the cusp of growth -- a reading below 50 indicates output is contracting & reading over 50 expanding. Market participants expected the composite PMI to rise to 48.3, according to a Dow economists survey. Euro stocks crawled in positive territory after the data release. The rebound was driven by the euro zone's 2 large economies, Germany & France. Germany composite PMI rose to 54.2 in Aug from July's 49. It was the 1st time in 11 mos its private-sector output returned to growth as the services sector expanded at its fastest pace for 16 mos. In France, private-sector output grew for the first time in 15 months, with the mfg. sector posting its sharpest rise in production for a 1-1/2 years. The country's composite PMI rose to 50.9 in August from 47.3 in July. "PMI data are signaling that the unprecedented downturn was followed by an historically rapid rebound that positions the euro zone to post growth of GDP in the 3rd-Q," Rob Dobson, said senior economist at Markit,. Euro-zone GDP slid 0.1% on a quarterly basis between April & June -- the strongest reading since the 1st-Q of last year -- with support from a surprising return to growth in Germany & France. Mr. Dobson said rising job losses across the 16 countries that use the euro & the continued need for widespread & deep price discounting remained a concern. But the outlook