LONDON (Reuters) - Euro zone business growth remained robust this month, with firms at their most optimistic in at least 5-1/2 years in a purchasing managers’ survey, despite indications that higher prices and a stronger currency were taking a toll.
The euro zone emerged as one of the best-performing major economies last year, and its businesses started 2018 by ramping up activity at the fastest rate in well over a decade.
But February’s preliminary Purchasing Managers’ Index (PMI) implied that the blistering growth pace set in January, the fastest in well over a decade, has lost a little momentum.
IHS Markit’s composite flash PMI for the euro zone, seen as a guide to economic health, fell to 57.5 this month, below all forecasts in a Reuters poll, which had predicted a more modest dip to 58.5 from January’s final reading of 58.8.
Nevertheless, this month’s reading was still one of the most expansionary - or farthest above 50 - in more than 11 years.
“February’s fall in the euro zone composite PMI still left the index at a very high level and consistent with continued healthy growth in early 2018,” said Jessica Hinds at Capital Economics.
“All in all, with the euro zone economy continuing to perform strongly and signs of a little inflationary pressure, we expect the ECB to signal in the coming weeks that its asset purchase program will end this year.”
Economists polled by Reuters expect the European Central Bank to end its asset purchase program by the end of 2018. [ECILT/EU]
QUARTERLY ACCELERATION
IHS Markit said the bloc was heading for its best quarterly growth since the second quarter of 2016, and that the PMI pointed to first quarter growth of 0.9 percent, much faster than the 0.6 percent predicted in a Reuters poll.
Firms shared that optimism - an index measuring expected output in a year’s time climbed to 68.3 from 68.0, its highest since IHS Markit started collecting the data in July 2012.
Consumer confidence in the bloc did fall more than expected this month, but that was from a 17-year high set in January, official data showed on Tuesday.
“The PMI indicates that the business outlook for the coming months has actually improved, it seems that the return of volatile markets has not had much effect on business confidence so far,” said Bert Colijn at ING.
Earlier data from Germany and France, the bloc’s two biggest economies and the only ones to publish flash PMIs, showed business growth in both countries eased more than expected.
“In the case of Germany and France, both indices remain at a fairly high level and suggest that in both countries, quarterly GDP growth picked up,” Capital Economics’ Hinds said.
Although German business activity did fall to a three-month low, business confidence there hit a record high as firms appeared to look past the uncertainty created by a failure to form a government in almost five months.
In France, the business outlook also continued to rise, and employment growth came within a fraction of a 16-1/2-year high seen in November.
MISSING EXPECTATIONS
A PMI covering the bloc’s dominant service industry matched the lowest forecast in a Reuters poll. It fell to 56.7 from 58.0, missing the consensus expectation for 57.6.
However, that weakening came as firms raised prices again, welcome news for the ECB as it moves to unwind its ultra-easy monetary policy.
The services output price index did fall to 52.8, but January's 53.6 was the highest reading since mid-2008. Since the start of the year, the euro EUR= is up around 3 percent against the dollar, making the euro zone's exports less attractive.
“Although they weren’t explicitly mentioned, we can surmise that those factors are coming in to play,” said Chris Williamson, chief business economist at IHS Markit.
“These will inevitably contribute to slower growth, but at the moment there is no explicit factor we can put our finger on to say what has caused this slowdown.”
The manufacturing PMI dropped to 58.5 from 59.6, again matching the lowest forecast in a Reuters poll, against a consensus forecast of 59.3.
An index measuring output, which feeds into the composite PMI, sank to a four-month low of 59.5 from 61.1.
Adding to suggestions that the strong euro may be having an effect, the export orders index - which does include trade within the bloc - fell to a seven-month low of 56.8 from 58.4.
Editing by Hugh Lawson
Bagikan Berita Ini
0 Response to "Euro zone business growth lost some steam in Feb but still robust"
Post a Comment