Eurozone business surveys point to 6-year high in economic growth

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Businesses in the eurozone are in slightly better health than previously thought, suggesting that economic growth in the region is running at a six-year high.

IHS Markit’s purchasing managers’ index for the bloc, which measures hiring, inventories and the like, came in at 56.8 in the final reading for April, a nose above earlier estimates. The services component produced a reading of 56.4, against an earlier measure of 56.2. Anything over 50 indicates expansion, and this is the 46th month of expansion in a row.

Among the details, final assessments showed a slightly weaker-than-expected reading from France, but a stronger outcome for Germany. Ireland led the pack. But the survey compilers point out that improvements appear to be in sync, with the gap between the readings from France, Germany and Italy at the joint-narrowest on record.

IHS Markit says in its statement:

Output growth accelerated at manufacturers and service providers, with rates of increase hitting 72- month records in both cases. The slightly sharper expansion was again registered in manufacturing. Underpinning growth of economic activity was a strong increase in incoming new business. New orders rose for the twenty-ninth month running, with the rate of expansion staying close to March’s high.

Chris Williamson at the research group says:

With the final reading coming in slightly above the earlier flash estimate, the PMI surveys portray an economy that is growing at an encouragingly robust pace and that risks are moving from the downside to a more balanced situation.

The April Eurozone PMI is historically consistent with a GDP growth rate of 0.7%, with similar rates of expansion signalled for both Germany and France. Even faster gains are being indicated in Spain and Ireland and Italy is also seeing growth perk up, highlighting the increasingly broad-based nature of the current upturn.

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