Eurozone business activity accelerated for the third straight month to hit a seven-month high in February on stronger demand, raising hopes of recovery gaining strength, flash data from Markit Economics showed Friday. New order growth also prompted firms to raise their staffing levels at the fastest pace since 2011.
The composite output index rose to 53.5 in February from 52.6 in January. It was also above the expected score of 53. A reading above 50 indicates expansion in the private sector.
Services continued to log the stronger pace of expansion of the two sectors with manufacturing growth remaining relatively subdued in February.
The Purchasing Managers' Index for services climbed to 53.9 in February from 52.7 in January. It was expected to rise slightly to 53.
Meanwhile, the manufacturing PMI rose less-than-expected to 51.1 from 51 in January. Economists had forecast the index to rise to 51.5.
"Undeterred by the ongoing Greek debt crisis, economic growth is gathering momentum and looks set to gain further traction in coming months," Chris Williamson, chief economist at Markit said.
According to Williamson, the economy is on course to grow by at least 0.3 percent in the first quarter, assuming March does not disappoint.
The persistent weakness of the euro and the launch of the European Central Bank's quantitative easing next month should help to support a continued slow recovery, Jessica Hinds, a European economist at Capital Economics, said.
A survey published by the European Commission yesterday showed that the consumer confidence index rose by 1.8 points to -6.7 in February, the highest score since September 2007.
New orders increased at the sharpest rate for seven months in February, Markit said. Inflows of new business into the service sector were stronger than in manufacturing.
The survey revealed that companies struggled to cope with the increased new order inflow, which resulted in backlogs of uncompleted orders and that for first time since last April.
With backlogs of work accumulating and demand showing signs of picking up, firms took on extra staff at the fastest rate since August 2011.
On the inflation front, weaker oil prices were again cited as a major contributor to lower overall input costs, which fell for the second month running. Average selling prices fell at a reduced rate compared to January, which had seen the largest decline for almost five years.
Germany's growth accelerated for the third month in a row, though it was much dependent upon services activity.
The composite output index came in at 54.3 in February, a 7-month high, up from 53.5 in January.
The services PMI rose more-than-expected to 55.5, a 5-month high, from 54 in January. The score was expected to rise marginally to 54.4 in February.
At the same time, expansion in the manufacturing sector remained stable in February. The index remained at 50.9 versus an expected score of 51.5.
France reported its first upturn in business activity since April last year with growth hitting the fastest since August 2011.
The composite output index rose to 52.2 in February from 49.3 in January, more than the 49.8 reading expected by economists. The private sector expanded for the first time in ten months. It was also the highest score in 42 months.
The service sector also recovered in February as the corresponding PMI came in at 53.4, also a 42-month high. This was less than the 49.4 score in January and the 49.9 reading expected by economists.
Meanwhile, manufacturers reported a faster rate of decline in output, with the latest drop the fastest in two months. The manufacturing PMI fell 47.7 in February from 49.2 in the previous month. Economists had expected the index to rise to 49.6.
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