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Growth in the eurozone’s three biggest economies underpinned another bumper month in the continent’s recovery in February, pointing to an acceleration in GDP at the start of a major electoral year.

IHS Markit’s closely-watched survey of purchasing managers in the eurozone reported another climb last month, hitting its best level since the sovereign debt crisis in April 2011. The gauge jumped from 54.4 to 56 (any reading above 50 indicates growth).

Following steadily rising inflation and falling unemployment, February’s performance is another sign the eurozone economy was beginning to “fire on all cylinders”, said Chris Williamson, chief economist at IHS Markit.

The survey measures output, hiring and expectations across the continent’s private sector, spanning the services, manufacturing and construction industries. It closely-tracks official GDP numbers and is a good early indicator of developments in the economy.

In encouraging news for policymakers, Italy and France – which have both under-performed compared to major rival Germany in recent years – picked up further steam in February.

France’s composite PMI came in at a more than five-year high of 55.9 two months ahead of its presidential elections, while Italian businesses reported their best level of activity since the end of 2015, rising two points to 54.8.

Traditional growth engine Germany also expanded at its best level since April 2014 at 56.1. Markit’s calculations suggest France and Germany – the bloc’s two biggest economies – will record quarterly growth of 0.6 per cent at the start of the year, accelerating from 0.4 per cent in the last quarter.

“The labour market is also starting to boom, with jobs being created at the fastest rate for nearly a decade”, added Mr Williamson.

Stronger growth has been coupled with a sharp climb in inflation in recent months. Average eurozone inflation hit 2 per cent for the first time in four years in February, climbing above the European Central Bank’s target rate and raising fresh questions about the longevity of its stimulus measures.

Markit’s report said businesses were also passing on higher costs to their customers, with selling prices up at the fastest pace since 2011, while the employment sub-gauge rose at its best rate since 2008.

Investors are currently eyeing early 2018 as the time for the ECB’s first rate hike since 2011.


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