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Eurozone Service Economy Expands at Fastest Pace in 32 months: Markit

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Eurozone Service Economy Expands at Fastest Pace in 32 months: Markit

The Eurozone service economy expanded at the fastest pace in 32 months, a sign recovery is broadening throughout the region.

Markit Group’s gauge of Eurozone service activity in February increased from 51.6 to 52.6, exceeding estimates. Business activity has been above the 50 mark that separates expansion from contraction for seven consecutive months. The composite index, which includes service activity and manufacturing output, rose from 52.9 to 53.3.

Business activity and new orders rose sharply, as domestic markets continued to gain traction. Business confidence remained close to January’s two-and-a-half year high, a sign companies are optimistic domestic demand will continue to improve. Job creation was broadly unchanged throughout the region, as positive contributions in Germany and Italy were offset by job losses in France and southern Europe.

Business expansion was broad-based, with every country included in the survey making positive contributions. Ireland recorded the sharpest expansion, while Germany saw service activity improve at the strongest pace in 32 months. France, meanwhile, was the only country to report contraction in service activity.

“The final PMI indicates that the [E]urozone economy grew at the fastest rate since June 2011,” wrote Markit chief economist Chris Williamson in a press release. “The survey suggests the region is on course to grow by 0.4-0.5 [percent] in the first quarter, which would be its best performance for three years.”

February marked the eighth consecutive month of recovery in the euro area, the strongest run since the first half of 2011. Although job creation remains subdued, hiring trends appear to be improving. Regional divergences continue to be the biggest concern, according to Williamson, with France and Germany offering one of the most striking contrasts in the history of the PMI surveys.

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