European manufacturing activity accelerates

Manufacturing activity in the euro zone accelerated more than previously thought in January, indicating the sector is regaining momentum across most of the region, even Ireland and Italy. The notable exception was Greece.

However the Markit Manufacturing Purchasing Managers’ Index, which surveys thousands of businesses, found companies are facing surging raw material costs.

That adds to signs of rising inflation pressure in other sectors of the economy.

It was the same story in Britain where manufacturing activity also grew at a record pace in January while price pressures picked up.

The data has led economists to speculation that the European Central Bank and Britain’s Bank of England may have to raise interest rates sooner rather than later to tame inflation.

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