Euro zone businesses growth fastest since April 2011
Economic activity in the euro zone in February unexpectedly accelerated to near a six-year high since 2011, boosting optimism over the region’s prospects, preliminary data showed on Tuesday.
IHS Markit’s eurozone flash composite Purchasing Managers’ Index seen as a good overall growth indicator and rose sharply to 56.0, the highest since April 2011, from 54.4 in January, confounding expectations for a slight dip to 54.3.
The broad-based acceleration which showed France’s momentum getting close to Germany’s suggests that if sustained, economic growth could hit 0.6 percent in the first quarter, according to Markit.
That is faster than the 0.4 percent economists predicted in a Reuters poll earlier this month and suggests an economy in rude health before key national elections this year in France, Germany and the Netherlands.
Chief business economist at IHS Markit Chris Williamson said that the increased momentum is due to demand growing at a stronger rate but also that upturn becoming more broad-based.
Importantly, what we now have is France joining the party. It’s been a laggard in the region and a drag on the euro zone upturn for a few years and there are finally signs the drag is easing.
The composite sub-index measuring employment at 54.3, was the highest in more than nine years. The renewed strength in the PMIs would also come as a welcome relief to the European Central Bank widely expected to remain on the sidelines through upcoming national elections in three major economies in the currency bloc.
The euro zone flash manufacturing PMI rose to 55.5 from January’s 55.2, the highest since April 2011. New export orders also rose to a near six-year high of 55.5 from January’s 55.2, suggesting a weaker currency is helping boost demand.
The services PMI was also buoyant with the business activity index rising to 55.6 from 53.7 easily beating the Reuters poll expectation of no change at 53.7 and the most optimistic forecast in the survey.
The services sub-index measuring incoming new business, at 55.8, was also the highest in nearly six years.
Source : Reuters