IHS Markit’s final composite Purchasing Managers’ Index has risen to a new historic high.
The results of a survey have disclosed that business in the Eurozone has grown in its fastest pace in almost 6 years with job creation being the fastest since almost a decade.
Robust demand and surging exports have been identified as the key underlying factors for these results.
IHS Markit’s final composite Purchasing Managers’ Index, widely seen as an indicator of growth, had risen to 56.0 in February from its position 54.4 in January.
This broad based expansion perhaps could put to rest lingering doubts regarding the uneven growth in the European Union.
As per Markit, the economic growth is likely to be hit 0.6% in the first quarter.
Last month, economists had predicted that the economies in the Eurozone will grow at 0.4%, basing their forecast on major upset in election outcomes in the region this year.
“The final PMI numbers paint a bright picture of a euro zone economy starting to fire on all cylinders. Growth accelerated in all of the four largest member states in February to suggest an increasingly sustainable and robust-looking upturn,” said Chris Williamson, chief business economist at IHS Markit.
He went on to add, “The broad-based improvement has pushed the eurozone PMI into territory consistent with 0.6 percent GDP growth in the first quarter. The labor market is also starting to boom, with jobs being created at the fastest rate for nearly a decade.”
A sub-index, which measures employment, rose to 53.8% from 53.4%, its highest since October 2007.
Companies have also raised their prices faster than any times in the last 6 years. A PMI for the service industry jumped to 55.5% from 53.7% in January, just below its peak of 55.6%.
A sub-index which measures business confidence in the dominant services sector, in Eurozone also jumped to 66.7%, its highest since March 2011.
These PMI are likely to be seen as a welcome relief by the European Central Bank.
“The acceleration in growth, employment and prices signaled by the surveys suggests that analysts will begin to pull forward their expectations of when the ECB could begin tapering its stimulus,” said Williamson.
“However, it seems likely that central bank rhetoric will remain dovish in coming months, focusing on the headwinds that the economy faces in 2017, and specifically the need for policy to remain accommodative in the face of political uncertainty.”