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Eurozone manufacturing PMI strongest since April 2011, GDP growth of 0.6 pct likely in Q1

The pace of economic growth in the eurozone improved markedly to hit a near six-year high in February. Markit Eurozone manufacturing PMI printed at 56.0 in February, according to the preliminary ‘flash’ estimate. Flash eurozone services PMI activity index came in at 55.6, a 69-month high, from 53.7 in January.

Job creation was the best seen for nine and a half years, order book growth picked up and business optimism moved higher, all boding well for the recovery to maintain strong momentum in coming months. Inflationary pressures meanwhile continued to intensify. Firms’ average input costs rose at the steepest rate since May 2011, with rates accelerating in both services and manufacturing.

By country, growth accelerated to show similar robust rates in both France and Germany, where composite PMIs of 56.2 and 56.1 were recorded respectively. Notably, France, which had been a laggard in the region, and a drag on the euro zone upturn for a few years is now joining the party and there are finally signs the drag is easing.

“The eurozone economy moved up a gear in February. The rise in the flash PMI to its highest since April 2011 means that GDP growth of 0.6% could be seen in the first quarter if this pace of expansion is sustained into March." said Chris Williamson, Chief Business Economist at IHS Markit.

The euro failed to get any traction from the PMI data, and was last down 0.4 percent at $1.0564, having moved little on Monday, due partly to the absence of U.S. investors because of the public holiday.

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