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Euro zone private sector booming


Euro zone private sector booming


New business surveys show activity in the euro zone’s private sector growing faster than expected.

The Ifo economic think tank’s German business morale survey rose to a record high in February, while Markit’s Eurozone Manufacturing purchasing manager index leapt to its best level in nearly 11 years in January and its services survey reached its highest reading since August 2007.

Worryingly, however, for policymakers concerned about inflation, the costs of raw materials and energy soared at their fastest pace in the Markit survey’s near 14-year history.

The output price index also climbed to a survey high, suggesting firms were passing on some of the increases to customers.

Comments from several European Central Bank policymakers on Monday underlined the growing concern over inflation, with ECB Executive Board member Lorenzo Bini Smaghi warning that rises in food and fuel prices could prove to be a permanent phenomenon.

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