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Europe Looks Less Bad, But Hardly Good

Europe is still a mess but, according to the latest manufacturing numbers, it’s at least slightly less messy than in 2012.

Markit Economics releases PMI data for regions around the world. Looking at its latest data dump, we see that the EU is at a 16-month high with its purchasing manager’s index reading.

Of course, that number is 48.8 for the entire euro zone and anything less than 50 signals a decline … so it’s not like we’ve pulled completely out of the tailspin yet. However there are some very positive signs that include:

  • Spain and Ireland PMI at 50 or better, which signals growth.
  • Roughly two-year highs for PMI in battered nations Spain, Italy and Greece.
  • PMIs up in all nations but Germany.

Here’s the rundown of the data, and a chart that’s a bit noisy but hopefully informative.

europmi

So far this year, European investments have been slow to find their footing. The Vanguard FTSE Europe ETF (VGK) is in the red slightly, dramatically underperforming the rally in the U.S., and is off more than 8% from 2013 highs just a few weeks ago.

Major European stocks including HSBC (HBC), Royal Dutch Shell (RDS.A, RDS.B) and Nestle (NSRGY) are also break-even at best while peers around the world have had a great year.

But based on euro zone PMI, the momentum may be starting to turn.

Of course, that turnaround will take time and still has a long way to go. So investors thinking of dabbling in European stocks should be patient.

Especially if China continues to suffer, the Mideast is mired in geopolitical unrest and there aren’t many major export markets seeing growth for whatever manufacturing the EU has up and running right now.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP

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