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Latest PMI report shows Europe is contracting whereas UK shows growth

The latest PMI figures released today show that manufacturing in the Euro zone has contracted for the eighth month in a row and an increase in unemployment figures to the highest in 14 years is leading to fears that the Euro may have slipped back into a recession for the first quarter of 2012.

Better news emerged from the UK with the country’s PMI rising to a surprising 52.1, up from a revised figure of 51.5 in February. The index has been above the 50 level that separates expansion from contraction since December.

The latest figures suggest that the UK is set to grow better than expected thanks to the fastest growth for manufacturing in 10months. A survey by the Confederation of British industry shows that financial services are showing stronger business and plans to recruit more staff.

“There were further signs that the manufacturing malaise already exhibited at the periphery of the currency bloc was spreading to the core,” said Markit in its report today. “Demand was weaker in both domestic and export markets.”

The contraction of the Euro zone is being blamed on the continuing debt crisis in Greece, Italy, Portugal and Spain. However Ireland performed better than expected surpassing 50.0 for the first time in five months.

The positive UK data combined with disappointing Eurozone figures caused the Pound to Euro Exchange Rate to rise to a 2-week high of 1.2054.