Some positive economic news for the eurozone, with new figures suggesting the region’s economy is on course to grow by 0.4 to 0.5 percent in the first three months of this year
Surveys of thousands of companies by the financial information firm Markit show private businesses enjoyed their fastest growth rate in over two and a half years last month.
It was though a mixed picture as manufacturing growth slowed, while the service industry expanded quicker than had been initially calculated from the first reading of the February data.
And there was big geographic variation. The gulf between expansion in Germany, Europe’s biggest economy, and the decline in No. 2 France has only been wider once in the 16-year history of the surveys.
Germany’s composite purchasing manager’s index compiled from the surveys – which includes services and manufacturing – soared to a 33-month high.
By contrast France’s fell further below the line between expansion and contraction where it has languished for most of the past two years.
Italy and Spain, the third and fourth biggest economies in the bloc, both had robust growth.
At the same time Eurostat, the EU’s statistics agency, revealed that retail sales in the eurozone rose by a monthly rate of 1.6 percent in January, more than offsetting the previous month’s 1.3 percent decline.
European Central Bank ponders deflation
This comes just one day before the European Central Bank was due to announce its latest policy decisions.
President Mario Dragi will, however, get little comfort on deflation from these numbers as businesses had to to cut prices for the 22nd straight month to drum up demand.
Inflation across the currency union was just 0.8 percent in February, well below the ECB’s 2.0 percent target ceiling.
Just ahead of Thursday’s meeting International Monetary Fund officials said the ECB should cut interest rates and either inject more liquidity into the banking system via its Long-Term Refinancing Operations (LTRO) or start public and private asset purchases.
“You can have too much of a good thing, including low inflation,” Reza Moghadam, the head of the IMF’s European Department said in a blog.