Whilst all eyes are on Brussels and Athens for a conclusion to the Greek debt drama (with Tsipras seemingly trying to bite the hand that feeds him and new heights of brinkmanship being raised on a daily basis), the current scorecard for Eurozone business output (naturally including Greece) is out.
According to the most recent Markit composite Purchasing Managers’ Index (PMI) for the Eurozone, business output is running at the strongest level seen for four years. The index which shows expansion as any figure above 50, has strengthened from 53.6 to 54.1. The service sector hasn’t grown so strongly for four years and factory output has also enjoyed its best quarterly run for a year. Encouragingly, employment and new orders in manufacturing increased at their best rate for four years in the second quarter of this year.
According to Markit’s chief economist, Chris Williamson: "The PMI is signalling GDP growth of 0.4% for the region as a whole in the second quarter." If this prediction turns out to be accurate, it will mirror the blocs Q1 performance. The long awaited upturn in Eurozone fortunes seems to be broad-based which will be most welcome. This is underlined by the fact that if the performance of the two major Eurozone economies, France and Germany, are stripped from the data, growth within the remaining 17 states is at the best level seen for 8 years.
Of course, nobody can be sure just how much economic damage would result from a “Grexit”, but it seems to be the case that investors have already priced it in as both the forex and stock markets have taken the drama in their stride, so far… It could be that most investors are counting on the Greeks to act in their own self-interest at the death, but it would be all too easy for a wheel to come off at this stage as any deal Tsipras were to strike would need to be approved by the Greek parliament which, it seems, is not a foregone conclusion even if he can get the IMF, ECB and EU on board first.