Eurozone Economic Recovery Gathers Pace at End of 2013

The eurozone's economic recovery accelerated at the end of 2013, but some member states are feeling it more than others.

The Markit Eurozone PMI Composite Output Index hit a three-month high in December at 52.1, up from 51.7 in November and its second highest level in two and a half years.

Similarly, the Eurozone Services Business Activity Index came in at 51.0. Any reading above 50 signifies expansion.

"The PMI surveys indicate that the eurozone recovery gained further traction at the end of last year. December saw the second-largest increase in business activity since June 2011 and rounded off the best quarter for two-and-a-half years," said Chris Williamson, chief economist at Markit.

However, the figures also showed that the recovery remained imbalanced between different eurozone members.

Ireland and Spain showed the greatest increases in output growth while France recorded a notable deterioration in its output.

Spain's output growth hit a 77-month high with a reading of 53.9 while Ireland hit a 2-month high with a score of 58.6.

But the data showed that Italy and France have continuing weaknesses.

France's PMI came in at 47.3, a seven month low, while Italy registered a borderline score at 50.0.

Germany's output growth hit a two month low of 55.0.

"While the region as a whole looks set for a strengthening recovery in 2014, growth is uneven, with France in particular having possibly slid back into recession late last year," said Williamson.

"The upturn in the rest of the region may help bring about a return to growth in France, but the data are highlighting the need for structural reforms to bring about a more sustainable and robust recovery in the region's second-largest economy."

Expectations are that demand and growth will continue to improve into 2014, added Williamson.

However, Ishaq Siddiqi, a market analyst, said that pressure remained to secure the recovery in the eurozone with France being a particular worry.

"Overall, the eurozone PMI services data remained unchanged at 51.0 – pressure certainly on the European Central Bank (ECB) at this week's policy meeting to offer more information over how the central bank plans to gear monetary policy this year," Siddiqi said.

"ECB will be pressured to look into its toolbox to stimulate the eurozone economy, particularly nations like France where the pace of contraction is rather worrying."