Eurozone PMI at 54.4, signalling ‘solid’ economic growth in January

The eurozone’s economy continued to grow at a healthy clip in January, judging from the final figures from IHS Markit’s closely-watched PMI surveys.

The composite purchasing managers’ index for the single currency area came in at 54.4 for January, the same as December and slightly ahead of the earlier flash reading.

Respondents to the PMI surveys report on measures such as orders, hiring and inventories to give a picture of the overall health of a sector. A headline number above 50 indicates growth during the month. The surveys are seen as useful early indicators of economic growth, and this month’s composite results imply a quarterly economic growth rate of 0.4 per cent.

The services sub-index was also better than previously estimated, maintaining December’s level of 53.7 compared to a flash reading of 53.6.

Ireland reported the strongest expansion in the eurozone, but growth was “solid” across the currency area’s “big four” economies of Germany, Spain, France and Italy, according to IHS Markit.

The results come after a similarly positive month for manufacturers, with a weak euro helping the sector to its best survey results in almost six years.

January was a particularly strong month for job creation, which rose to its highest level since February 2008.

Chris Williamson, IHS Markit chief business economist, said:

The final PMI indicated marginally stronger business activity growth than the earlier flash estimate, and usggests the eurozone economy is growing at the fastest rate since mid-2011.

On a national level, Italian businesses reported an improvement over the previous month, though not quite as large an uptick as economists had predicted, with a headline reading for the service sector of 52.4.

French service businesses reported their seventh straight month of improvements, helping the country’s composite index, which includes previously-reported manufacturing figures, hit its highest level in almost six years.

Germany, in contrast, reported its second successive month of slowing growth, with both the services and composite indices at four-month lows. However, they remained relatively strong at 53.4 and 54.8 respectively, and businesses’ outlook for the coming 12 months rose to its highest level in a year.