The growth of business activity in the eurozone continued at the beginning of the year. Production growth accelerated to an almost 12-year high amid a strong influx of new orders. The pace of job creation has been maximized since the end of 2000.
The consolidated index of business activity (Purchasing Managers Index, PMI) of 19 Eurozone countries in January rose from the December level of 58.1 to 58.8 points.
The indicator value has become maximum since June 2006, according to the final IHS Markit data.
The preliminary assessment was 58.6 points.
An indicator below 50 points reflects a decrease in activity, above – an increase in activity.
The indicator indicates an increase in business activity over 55 months.
Service PMI rose from 56.6 to 58 points in January.
The preliminary assessment was 57.6 points.
The growth of business activity in the sector accelerated to a maximum since August 2007.
Business activity in January grew at a significant pace in all countries covered by the study.
France became a growth leader: business growth rates corresponded to the December indicator and remained close to the November maximum for six and a half years.
Only slightly lower than in France, there were growth rates of business activity in Germany (PMI at a maximum of 81 months), Italy (a maximum of 139 months) and Ireland (a minimum of two months).
Growth in Spain accelerated to a six-month high.
Due to prolonged economic growth, price pressures have intensified, partly reflecting rising oil prices and the fact that demand is ahead of supply.
Purchasing and selling prices have grown at the highest rates since mid-2011. Accelerated price increases have been observed both in the manufacturing industry and in the service sector.
Against the backdrop of increased business activity, there was a further accumulation of unfinished orders in both sectors. This in turn contributed to job creation.
Employment growth was in line with the November high of 17 years. Faster employment growth was observed in Germany (almost a record pace), which offset a slightly slower growth in France, Italy, Spain and Ireland.
Meanwhile, business sentiment improved to an eight-month high.
"If the current level (PMI) persists during February and March, the PMI will indicate a 1% quarter-on-quarter increase in GDP (Eurozone) in the first quarter," said Markit chief economist Chris Williamson.
The official initial GDP estimate is likely to be weaker than this indicator, however, the trend in recent GDP data shows that preliminary estimates of growth are subsequently revised upward (and more closely with PMI).
"For the same reason, an estimate of GDP growth of 0.6%, as evidenced by preliminary Eurostat data for the IV quarter of 2017, is likely to be revised upward and closer to 0.8% – the pace indicated by the PMI," – added Williamson.
At a meeting in January, the European Central Bank left interest rates unchanged.
The regulator reiterated that it would make monthly asset purchases of € 30 billion by the end of September 2018 "or longer if necessary."
At a press conference following a meeting of the Board of Governors, ECB President Mario Draghi said that the eurozone still needs serious monetary stimulus.