Euro zone economy strongest in nearly 6 years

Euro zone businesses enjoyed their best quarter in six years at the start of 2017 and although growth was not quite as fast as a flash estimate, the upturn was broad-based, a survey suggested on Wednesday.
Soaring demand allowed firms to raise prices at the fastest rate since mid-2011. Survey compiler IHS Markit said the data pointed to the first-quarter economic growth of 0.6 percent, faster than the 0.5 percent predicted in a Reuters poll last month.
The final Markit Composite Purchasing Managers’ Index (PMI), regarded as a good guide to growth, rose to a near-six-year high of 56.4 in March from February’s 56. The flash reading, at 56.7, had suggested a sharper rise.
“This is quite a positive start to the year and pointing to accelerated growth in the region as a whole,” said Oliver Kolodseike of Centre for Economics & Business Research (CEBR).
Earlier surveys from Germany and France, the bloc’s two biggest economies, showed growth accelerated last month and while the rates of expansion slowed in Italy and Spain they remained robust.
Output prices rose at their fastest rate in nearly six years. The sub-index jumped to 53.1 from 52.2, lower than the flash 53.3 reading but still probably welcomed by the European Central Bank (ECB), which has been trying to stimulate inflation for years.
Inflation in the 19-member currency union plunged to 1.5 percent in March, official data showed on Friday, apparently vindicating ECB President Mario Draghi’s cautious policy stance and proving the bloc may be years away from a sustained rise in consumer prices. The ECB would like inflation just below 2 percent.
ECB chief economist Peter Praet said on Monday the bank’s monetary policy stance remained appropriate.
“We do not expect the ECB to act yet, they will keep their policy stance as a ‘wait-and-see’ approach. The PMI numbers are just one indicator — you have to wait for more official data,” Kolodseike said.
A PMI covering the bloc’s dominant services industry came in below a flash estimate of 56.5, registering 56. Still, that was above the 55.5 February final number and was the highest since May 2011.

Source: Arab News