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Thursday March 28, 2024

Eurozone business grows fastest this year

By our correspondents
December 06, 2016

LONDON: Eurozone business activity grew at its quickest pace this year in November and firms, which benefited from a weaker euro, raised prices faster than at any time in five years, a survey found on Monday.

Policymakers at the European Central Bank this week are expected to announce a six-month extension to their asset purchase programme to try to boost inflation, further denting the currency and offering support to exporters.

IHS Markit´s final composite Purchasing Managers´ Index for the euro zone was 53.9 in November, below a 54.1 flash estimate but beating October´s 53.3 and its highest since December.

The index has been above the 50 mark that divides growth from contraction since mid-2013."The composite PMI was revised down slightly but it´s still consistent with a pickup in euro zone GDP growth which is quite positive," said Stephen Brown at Capital Economics.

Adding to the more upbeat picture, retail sales rose more than expected in October, official data showed earlier.  The PMI for the dominant services industry jumped to 53.8 from 52.8, below the flash 54.1 but its highest level this year. Manufacturers enjoyed their best month since the start of 2014 in November, a sister survey showed last week.

With activity picking up, the PMI points to fourth quarter economic growth of 0.4 percent, IHS Markit said, matching the prediction in a Reuters poll on Friday.

Activity in the German services sector hit a six-month high in November, supporting overall solid growth in the private sector and adding to signs that Europe´s largest economy has rebounded in the current quarter.

France´s recovery extended into a fifth month, and growth accelerated in both Spain and Italy.

New orders also jumped, suggesting the pickup may continue through to the end of the year.  The new orders index for the service industry climbed to a 10-month high of 53.5 from 52.6.

Years of ultra-loose monetary policy have so far failed to get inflation anywhere near the ECB´s close-to-2-percent target but pressures are mounting slowly. The composite output price index rose to 50.6 from 50.0, its highest since August 2011.