GERMANY HAS powered a marked revival in euro zone economic activity this month, according to a closely watched indicator.

The euro zone purchasing managers’ index, covering manufacturing and services, rose unexpectedly strongly from 53.8 in October to 55.4 in November, reversing falls in previous months which had pointed to a slowdown in activity.

Significantly, a record pace of job creation in German manufacturing shown by the survey could boost hopes of a lasting pick-up in consumer spending in Europe’s largest economy – which in turn would help ease global economic “imbalances”.

The results suggested the recovery in continental Europe’s largest economies had become more self-sustaining – offering possible relief for countries such as Ireland, Portugal and Greece.

They indicated the recovery could “move to a more mature, sustainable phase,” said Chris Williamson, chief economist at Markit, which produces the survey. But he warned that the upturn remained exceptionally unbalanced, with growth beyond France and Germany “stagnating at best”.

Euro zone growth prospects in the coming months are expected to be hit by fiscal austerity measures planned by governments across the continent – although the recent weakness of the euro could provide an offsetting boost to exports.

The purchasing managers’ survey stated that in Germany, job growth in manufacturing was the fastest since the survey began in 1996. In a clear sign that tumbling unemployment was feeding through into more spending in German high streets, the countrys statistics office reported separately that consumer spending rose by 0.4 per cent in the three months to September – the third consecutive quarterly increase.

France also saw a significant pick-up in economic activity this month, with its manufacturing purchasing managers’ index hitting 57.5 after 55.2 in October, the highest in 10 years. A figure above 50 indicates expansion in activity.

The results came as the European Central Bank prepared to unveil next week the latest steps in its “exit strategy” to unwind emergency measures taken to support the euro zone system after the collapse of Lehman Brothers investment bank in September 2008.

So far the crisis in Ireland, which accounts for less than 2 per cent of euro zone GDP, appears to have had little impact beyond the country’s borders. – (Copyright The Financial Times Limited 2010)