Mar 24, 2017

Eurozone recovery picking up pace, PMIs show

The eurozone's economy may have picked up during the first three months of 2017, according to surveys of purchasing managers released Friday


Raising expectations that the European Central Bank will consider a moderation of its stimulus measures over the coming year.

Data firm IHS Markit said its composite Purchasing Managers Index for the eurozone's manufacturers and service providers, which is based on a survey of 5,000 companies, rose to 56.7 in March from 56.0 in February, reaching its highest level since April 2011. The rise was unexpected, with economists surveyed by The Wall Street Journal last week having forecast a drop in the measure. A reading above 50.0 signals an increase in activity, while a reading below signals a decline.

The average reading for the first three months of the year was the highest since the same period of 2011, pointing to an acceleration in quarter-to-quarter growth from the 0.4% rate recorded at the end of last year. The surveys suggest that a faster rate of expansion is likely to be sustained over coming months, since new orders also surged and businesses hired additional workers at the fastest pace in close to a decade.

"The acceleration in growth towards the end of the quarter, as well as improving trends in new business and an increased appetite to hire, suggest that strong growth momentum will be sustained into the second quarter," said Chris Williamson, IHS Markit's chief business economist.

Mr. Williamson said the PMI's average over the three months through March were consistent with a quarter-to-quarter economic growth rate of 0.6%. While the PMI is at a six-year high, that would only be the fastest expansion in a single quarter since the first three months of 2015, which was an exceptional period for an economy that has more typically grown at the rate recorded in the fourth quarter of last year since it emerged from recession in mid-2013.

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