Europe Showing Signs of Economic Recovery
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According to the article, the euro zone came out of a long recession in the second quarter, and a survey last week of purchasing managers—a guide to how firms see their business growing in the coming months—seemed to confirm recovery, albeit tentatively, is taking root.
"There is certainly growing optimism that things are on the mend in Europe," said Vasant Prabhu, CFO of Starwood Hotel and Resorts Worldwide, one of a host of executives to comment during the third-quarter earnings season. The company, which runs Sheraton and other hotel brands, said it did well from tourists in Italy and Spain and made more revenue from each room thanks to a lack of new hotels opening.
Among multinationals whose job it is to fill the jobs that companies start to create as they expand, there is a similar sense of being at the leading edge of an upturn in fortunes. "The positive signals that emerged during the previous quarter persisted in the third quarter," said Rob Zandbergen, CEO of USG People, echoing comments from rival Manpower.
The staffing sector is seen as an economic barometer as firms tend to hire temporary staff first, waiting for further evidence of recovery before adding to their permanent payroll. In the article, Zandbergen said companies dealing with logistics and making semi-finished goods—typically involved in the early stages of production before products reach their final buyers—were doing well: "A number of early-cyclical sectors returned to revenue growth in the third quarter," he said.
Across the Atlantic, the article’s author Bryan noted, "American companies are showing increasingly nuanced views on Europe, a far cry from the near panicked run for the exits of late 2011. International Paper Co, for example, reported better-than-expected earnings, helped in part by a surprising improvement in European sales of industrial packaging. A better than expected harvest resulted in greater demand for boxes for avocados, peaches, and other fruit and vegetables."
IP CEO John Faraci told Reuters in an interview that "the euro zone economy has hit the bottom. As we look at our business there, the volume declines have stopped."
Dow Chemical, which has trimmed capacity in Europe and reported a 6% drop in quarterly sales volume, was nonetheless one of several companies offering guarded optimism about the next few quarters. Rival DuPont also spoke of improvement and diversified manufacturer 3M reported its strongest quarter in Europe since the first three months of 2011.
"Conditions in Europe remain soft," said Dow CEO Andrew Liveris. "However, in our view the market has found bottom and we expect to see more positive signals in the near term than in the previous three years, especially in the northern zone countries."
