“Some of my friends who also lost their jobs are finding work,” the 35-year-old Silva said Feb. 13, opening day at the distribution center operated by Jeronimo Martins SGPS SA, Portugal’s biggest food retailer. “Things seem to be improving in terms of jobs in Portugal.”
The recovery initially reflected by financial markets is trickling down from Germany. The overall euro economy grew 0.3 percent in the final three months of 2013, expanding for the third consecutive quarter.
“The euro area is beginning to show signs of recovery,” Organization for Economic Cooperation and Development Secretary-General Angel Gurria said Feb. 17 in Brussels. While financial tensions have abated and debt levels are stabilizing, “growth is still weak and very uneven,” he added.
The euro “trades increasingly like a safe-haven currency,” Peter Kinsella, a senior currency strategist at Commerzbank AG in London, said in an interview yesterday on Bloomberg Radio’s “The First Word” with Bob Moon. “If the euro remains robust, I don’t see it falling off the wagon the way we did two or three years ago.”
Throughout 2013, the recovery flickered across stock and bond traders’ screens. The Stoxx Europe 600 Index gained 17 percent, the best performance since 2009. Investors who ventured back into the bond market in Greece, where the euro crisis started in 2010, racked up 37 percent returns after a gain of almost 100 percent the year before, according to data compiled by Bloomberg and the European Federation of Financial Analysts Societies.
That enthusiasm was slow to seep into the economy, which shrank 0.4 percent in 2013. Not that there weren’t bright spots: home prices in Ireland rose for the first time in six years, Greece started paying its own way by posting an operating budget surplus, and Spain earned more from exports than it spent on imports for the first time in at least two decades.
Carmakers may be a barometer of better times ahead, after showing a sales increase in Europe for the fifth consecutive month in January. Renault SA, based in the Paris suburb of Boulogne-Billancourt, reported a 59 percent jump in 2013 operating profit. Stuttgart, Germany-based Daimler AG said fourth-quarter profit surged 45 percent and earnings will rise “significantly” this year. Demand is resilient enough that Toyota City, Japan-based Toyota Motor Corp., the world’s largest automaker, is adding a third shift at a French factory that produces its Yaris model.
“The crisis of the euro zone is over, no existential doubt about the euro,” French Finance Minister Pierre Moscovici told Bloomberg Television in Washington on Feb. 12. “There is a crisis in the euro zone, but it’s of another nature: how can we speed up our growth.”
Savers outnumber spenders in southern Europe especially, thanks to the combination of public and private debt, budget cuts, economic contraction and unemployment. The split-screen nature of the European economy — with the jobless rate as low as 4.9 percent in Austria and as high as 28 percent in Greece — complicates the task of setting a single economic policy for the euro zone’s 333 million people.
With the main rate now at 0.25 percent and unable to go much lower, the ECB — in the footsteps of the U.S. Federal Reserve and Bank of Japan — is casting about for unorthodox ways of keeping the recovery alive. ECB President Mario Draghi has signaled that a further easing of monetary policy may be on the agenda at the bank’s next policy meeting on March 6. — (Bloomberg)