|Published : 23 Nov 2016, 19:38:51 | Updated : 23 Nov 2016, 19:39:36|
Eurozone business sees highest growth in 2016
Euro zone business activity expanded the most in nearly a year in November on strong manufacturing and buoyant services growth in Germany, stirring some optimism that economic momentum is picking up again, reports Reuters.
A strong run of data is offers some hope a mid-year lull after a flurry of activity at the start of the year may be over, It is unlikely, however, to dent expectations the European Central Bank will announce an extension to its stimulus programme next month.
The IHS Markit Euro Zone Flash Composite Purchasing Managers' Index jumped to 54.1, its highest so far this year, from 53.3 in October, just shy of 54.3 last December.
It is now well above the 50 that divides growth from contraction, suggesting 0.4 per cent growth in the fourth quarter according to IHS Markit, slightly higher than the median forecast in a Reuters poll of 0.3 per cent.
Services firms in Germany and France, the bloc's top two economies, fared better than manufacturers. In the broader euro zone survey, however, manufacturers had a stronger run.
Taken together, the data suggest the pickup in activity is not confined to Germany and France.
"It looks like smaller economies are picking up pace after a very long time and downward price pressures are somewhat abating with companies managing to push through price increases," said Peter Vanden Houte, chief euro zone economist at ING Financial Markets.
"But I'm not sure the ECB will shift gear very rapidly for the simple reason that it has made mistakes in the past by tightening policy too soon. We still expect the ECB to lengthen its quantitative easing programme in December."
The ECB next meets on Dec. 8 and economists polled by Reuters last week expect it to announce an extension to its 80 billion euros a month bond purchase programme that is currently scheduled to end in March 2017.