Eu­ro­zone busi­nesses ex­pect surge in or­ders


Eu­ro­zone busi­nesses be­gan 2018 by in­creas­ing ac­tiv­ity faster than at any time in well over a decade as new or­ders surged de­spite firms rais­ing prices at the steep­est rate in al­most seven years, a sur­vey showed.

The eu­ro­zone emerged as one of the best-per­form­ing ma­jor economies last year. For­ward-look­ing in­di­ca­tors in the sur­vey sug­gest that mo­men­tum will con­tinue for at least another few months - wel­come news for the Euro­pean Cen­tral Bank as it moves to un­wind pol­icy.

IHS Markit's Fi­nal Com­pos­ite Pur­chas­ing Man­agers' In­dex, seen as a good over­all growth in­di­ca­tor for the eu­ro­zone, rose to 58.8 in Jan­uary from De­cem­ber's 58.1 and up from the flash es­ti­mate of 58.6.

It is now at its high­est since June 2006 and well above the 50 mark that sep­a­rates growth from con­trac­tion. "The op­ti­mism re­flects the strong eco­nomic up­turn that the euro zone is ex­pe­ri­enc­ing, which con­tin­ues to be broad­based and is set to con­tinue in the months ahead," said Bert Colijn at ING. "Back­logs of work are in­creas­ing, job cre­ation is his­tor­i­cally very strong and new or­ders con­tinue to pour in. This makes for a rosy growth out­look."

Ear­lier fig­ures from Ger­many, Europe's big­gest econ­omy, showed pri­vate sec­tor growth was at a near sev­enyear high while in France the busi­ness boom showed no sign of abat­ing in Jan­uary.

How­ever, in­vestor morale in the bloc de­te­ri­o­rated this month over dis­con­tent with coali­tion ne­go­ti­a­tions be­tween Ger­man Chan­cel­lor An­gela Merkel's con­ser­va­tives and the cen­tre-left So­cial Democrats (SPD).

Still, Ital­ian busi­ness growth was at a 10-1/2 year high while in Spain the ser­vice in­dus­try, worth around half of to­tal eco­nomic out­put, ex­panded at its fastest pace in six months.

Those up­beat sur­veys stand in stark con­trast to a Bri­tish PMI, which was at the bot­tom end of a range of fore­casts in a Reuters poll and showed the UK econ­omy slowed sharply in Jan­uary.

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