The pace of economic growth in the eurozone improved to come close to a six-year high in February, according to the IHS Markit Flash Eurozone Purchasing Manager’s Index (PMI). Signs bode well for the recovery to maintain itself in the coming months, with job creation the best in over nine years, order book growth picking up and business optimism moving higher.
Europe started to see solid growth numbers last year. “The eurozone has been expanding in a variety of areas—employment is up, productivity is up and there has been a solid improvement in measures like the PMI as well as measures such as the durable goods and production numbers,” said NACM Economist Chris Kuehl, Ph.D. “There have even been some suggestions that inflation has started to emerge. This is in a region that has been worried about deflation for most of the last 10 years.”
The Markit Eurozone PMI reached 56 in February, up from 54.4 in January and the highest since April 2011. Both manufacturing and services saw growth accelerate to rates not seen since 2011. February also marked the largest overall increase in new business since April 2011 and the largest monthly rise in employment since August 2007. Service sector jobs were created at a pace not seen in nine years and factory employment displayed the second-largest rise in almost six years.
The PMI “indicates that companies are currently firmly focused on expanding in the face of rising sales and fuller order books,” said Chris Williamson, chief business economist at IHS Markit. “The big surprise was France, where the PMI inched above that of Germany for the first time since August 2012. Both countries look to be growing at rates equivalent to .6% to .7% in the first quarter.”
“Trouble spots remain throughout the global economy, however,” Kuehl said. “Some of this has been worsened by the confusion over U.S. trade policy, but the bottom line is that there is reason enough for business people, investors and consumers to build more confidence.”
– Adam Fusco, editorial associate