The economy across the 19-country eurozone appears to be gaining momentum as a closely watched survey released yesterday showed that business activity hit a near four-year high this month.
In its monthly survey, financial information company Markit said its purchasing managers’ index for the region rose to 54.1 points this month from 53.3 last month. That was higher than market estimates of 53.6 and puts the index at its highest level since May 2011.
With anything above 50 indicating expansion, Markit says the survey points to quarterly growth of 0.3 percent in the first three months of the year.
Though that is unchanged from the fourth-quarter rate and below comparable levels in the US, it provides further evidence that the eurozone recovery is gaining a firm footing.
Markit says the upturn was largely fueled by new orders, with manufacturers in particular getting a boost from the weaker euro, which makes exports more competitive in international markets.
It also said that the improvement was broad-based across sectors, with Germany, the currency bloc’s biggest economy, doing particularly well. France, though lagging Germany, is also seeing its best performance since 2011, Markit said.
A sub-index measuring prices charged rose to an eight-month high of 49, but it has now spent three years below the breakeven level, suggesting inflation will not be making any sudden leaps from last month’s minus-0.3 percent.
Market chief economist Chris Williamson said the European Central Bank’s (ECB) recently launched monetary stimulus has started “at a time when the eurozone’s economic upturn is already starting to gain traction.”
Earlier this month, the ECB started its 1.1 trillion euro (US$1.2 trillion) bond-buying stimulus program, which it hopes will shore up the eurozone economy by keeping a lid on borrowing rates and getting inflation back to its target of just below 2 percent.
In the year to February, prices across the eurozone were down 0.3 percent.
Markit found some hope on that front, too, with downward pressure on prices easing this month as a result of higher wages and rising imports costs resulting from the euro’s appreciation.
Though broadly optimistic, Markit did sound a note of caution over the outlook.
“Worries persist, however, in relation to Greece and Russia, which are a reminder that ongoing recovery is by no means assured,” Williamson said.
Additional reporting by Reuters
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