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Is there life in the Euro Zone after all?

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Is there life in the Euro Zone after all?

Business activity hits a seven-month high in February.

Growth of business activity in the euro area economy hit a seven-month high in February, according to financial information provider Markit. The ‘flash’ reading of the Markit Eurozone PMI for February indicated that the Composite Output Index rose from 52.6 in January to 53.5.

Growth of business activity has now accelerated for three successive months, having almost stalled back in November, driven higher by stronger demand. New orders also grew at the sharpest rate for seven months in February.

“February’s PMI surveys paint an upbeat picture of improving eurozone economic health.” 

Companies often struggled to cope with the increased inflows of new business, meaning backlogs of uncompleted orders rose for the first time since last April. The rise was the largest since May 2011.

With backlogs of work accumulating, and demand showing signs of picking up, firms took on extra staff at the fastest rate since August 2011. Faster growth was seen in both manufacturing and services, where factory output and business activity measures hit seven-month highs.

Services continued to see the stronger pace of expansion of the two sectors, with manufacturing growth remaining relatively subdued. Inflows of new business into the service sector were also stronger than seen in manufacturing, with the latter recording only a marginal upturn in new orders (though still the best monthly improvement since last July).

“February’s PMI surveys paint an upbeat picture of improving eurozone economic health,” said  Chris Williamson, Chief Economist at Markit. “Undeterred by the ongoing Greek debt crisis, economic growth is gathering momentum and looks set to gain further traction in coming months. The economy is on course to grow by at least 0.3% in the first quarter, assuming March doesn’t disappoint.

“Even more encouraging is the faster rate of job creation reported during the month. Employment is now rising at the steepest rate since 2011 as employers become increasingly confident in the outlook and eager to take on staff to meet rising demand.”

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