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Eurozone Service Economy Expands for Sixth Consecutive Month: Markit

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Eurozone Service Economy Expands for Sixth Consecutive Month: Markit

Output in the Eurozone service economy expanded for the sixth consecutive month, a sign business conditions in peripheral nations are gradually improving.

Service activity in January helped propel the Eurozone economy to its best performance since June 2011. Markit Group’s gauge of Eurozone services rose last month from 51 to 51.6. The composite index, which includes service activity and manufacturing output, rose from 52.1 to 52.9. A reading above 50 is a general sign of expansion.

Business expansion in January eased in every country except Spain, a sign service demand remains subdued in the currency region. Ireland posted the strongest expansion in business activity and also recorded the highest level of all-sector output growth. Spain, meanwhile, posted a 78-month high in all-sector output, while Italy and France each posted three-month highs.

Overall, service expansion remains subdued in comparison to the manufacturing sector, which posted a 32-month high in January. New business growth in the service economy increased for the sixth consecutive month, albeit at a slower pace than December. Among the Eurozone’s largest members, Germany and Italy reported only slight gains in new work, while France continued to decline. The pace of job growth, meanwhile, was much more varied across the currency zone. Job creation continued to evade France and Italy, while Spain showed signs of stabilization. The pace of growth eased in Germany and accelerated at a strong pace in Ireland.

Despite the relative slowdown in new business, January data marked “a very encouraging start to the year,” according to Markit chief economist Chris Williamson. “Companies are reporting the strongest growth of business activity for two-and-a-half years, putting the economy on course to grow by 0.5 [percent] in the first quarter if this pace is sustained.”

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