Euro-area econ­omy shows strong pickup in Jan­uary

Muscat Daily - - BUSINESS -

Frank­furt, Ger­many - The euro area’s pri­vate sec­tor ex­panded at a faster-than-an­tic­i­pated pace in Jan­uary, pro­vid­ing a foun­da­tion for eco­nomic growth to ac­cel­er­ate in the course of the year.

A com­pos­ite Pur­chas­ing Man­agers’ In­dex rose to 51.3, the high­est level since Au­gust and above an ini­tial es­ti­mate. The pickup was led by sound mo­men­tum in ser­vices and helped by dis­si­pat­ing woes in man­u­fac­tur­ing.

The data point to eas­ing con­cerns that per­sis­tent weak­ness in in­dus­try could damp do­mes­tic de­mand, which has re­mained ro­bust thanks largely to a healthy la­bor mar­ket. While com­pa­nies across the re­gion still face sev­eral head­winds, con­fi­dence about the next 12 months jumped to the high­est level since Septem­ber 2018.

“Man­u­fac­tur­ing is show­ing wel­come signs of sta­bi­liz­ing af­ter the heavy down­turn seen last year, and ser­vices growth re­mains en­cour­ag­ingly re­silient,” said Chris Wil­liamson, an econ­o­mist at IHS Markit, which pub­lished the re­port. “We ex­pect to see growth gain­ing mo­men­tum steadily as 2020 pro­ceeds.”

Al­though trade ten­sions be­tween the US and China have cooled - re­duc­ing a ma­jor risk that weighed on global growth last year, Wil­liamson said Europe ap­pears to have be­come a new tar­get of Pres­i­dent Don­ald Trump’s rhetoric. The au­to­mo­tive sec­tor could be par­tic­u­larly vul­ner­a­ble to tar­iff threats.

Trade discussion­s with the UK could also add to busi­ness un­cer­tainty this year, he said.

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