Euro zone businesses report best month in 6½ years

Purchasing data points to pick-up in GDP growth after strong third quarter

A technician works on brake disc components in the Brembo factory in Curno, Italy. Photograph: Reuters

A technician works on brake disc components in the Brembo factory in Curno, Italy. Photograph: Reuters

 

Businesses across the euro zone reported their best monthly performance in more than 6½ years, suggesting the currency area’s economic revival is gathering pace.

The euro-zone purchasing managers’ index (PMI), compiled by IHS Markit, showed all main indicators of output, demand, employment and inflation at multi-year highs for the month of November. Employment growth appeared to be particularly strong, with job creation at a 17-year high.

The data, released on Thursday, reinforced the view that the strength of the euro-zone economy would continue into the end of the year, unfazed by the stronger euro. The PMI surveys are viewed as reliable indicators of economic growth and the latest data points to a further pick-up in GDP growth after a strong third quarter.

Chris Williamson, IHS Markit chief business economist, said: “The message from the latest euro-zone PMI is clear: business is booming.”

Frederik Ducrozet, senior economist at Pictet Wealth Management, said: “We are running out of superlatives to describe the state of the euro-area economy.”

Upside risks

He said that while business surveys had tended to overstate the true pace of growth in recent quarters, the new data still suggested upside risks to the outlook.

Respondents from both the services and manufacturing sectors reported better-than-expected activity over the month. A particularly good performance in Germany pushed the manufacturing sub-index to its second-highest level on record.

Goods exports rose at their fastest rate since the surveys began despite the recent strength of the euro, which has strengthened by more than 12 per cent against the dollar so far this year. UniCredit economist Edoardo Campanella suggested “solid foreign demand is offsetting any FX-related drag” amid a wider global upturn. – Copyright The Financial Times Limited 2017