Manufacturing activity picked up in the euro zone in February, adding to signs that the region’s economy is gathering strength. Increased output and new orders caused the manufacturing sector to grow at its fastest rate in nineteen months. That was the finding of a survey of purchasing managers at around 3,000 companies in eight euro zone countries. The index drawn up from those figures rose to 54.5, its highest level since July 2004.
Italy’s index was even better, hitting its highest in more than five years and Germany also put in a robust performance. However the euro zone employment index did not present such a happy picture with manufacturers again cutting jobs in most countries. The figures were released one day before the European Central Bank is widely expected to raise the cost of borrowing to 2.5%. The upbeat PMI readings added weight to the arguments for that rise and possibly more.