Eurozone economy near six year high

Eurozone economy near six year high
Two workers clean the glass roof of the World Trade Center in Dresden, eastern Germany, Monday, April 3, 2017. (Sebastian Kahnert/dpa via AP)

LONDON (AP) — The 19-country eurozone economy has just enjoyed its strongest quarter for nearly six years, a closely watched survey showed Wednesday.

In its wrap-up of economic developments in March, financial information company IHS Markit said its composite purchasing managers’ output index — a broad gauge of economic activity — rose to a 71-month high of 56.4 in March from 56.0 in February.

Though that’s slightly down on the initial estimate of 56.7, the index remains well above the 50 mark that indicates expansion.

The firm said output growth was registered across manufacturing and services, with the rates of expansion running at near six-year highs for both sectors. It estimates that quarterly economic growth is running at a more than healthy 0.6 percent, with the upturn broad-based across the region. Though the eurozone emerged from recession years ago, its rates of growth have been generally modest.

“Most welcome for a region still suffering near-double digit unemployment is a rise in the survey’s employment index to its highest for almost a decade, suggesting we should expect to see the jobless rate fall further in coming months,” said Chris Williamson, the firm’s chief business economist.

While the growth outlook appears to be improving, the firm says inflation pressures remain elevated and look set to feed through to higher consumer prices in the months to come.

However, few economists think the European Central Bank will start withdrawing its stimulus measures until later this year, not least because policymakers want to be sure that inflation is heading back toward more normal levels. A recent uptick in inflation has been largely due to rising oil prices, evidenced by the fact that the core rate, which strips out volatile items such as food and energy, remains stubbornly low.

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