Private sector output in the seventeen countries that share the euro is seen to be growing at the fastest rate in almost five years, although rapid price growth my prompt tighter monetary policy, according to The Wall Street Journal. On Monday, Markit reported that preliminary survey results suggest that the eurozone economy could grow by 0.7% in the first quarter, which would represent a significant increase from the 0.3% recorded in the last three months of 2010. The group’s Composite Output Index added 1.4 points to reached 58.4 in February, which is the highest since July 2006. Meanwhile, the Purchasing Managers’ Index added almost two points to reach 59 - the highest in more than a decade, while the Services Business Activity Index added 1.3 points to reach 55.9, which is the highest since August 2007.
The survey also showed “inflationary pressures building up,” according to Markit chief economist Chris Williamson, and economists see the data as a fresh indicator that the European Central Bank may raise interest rates sooner than had been expected. The report also highlighted divergence between the leading German economy and countries on the periphery embroiled in the debt crisis. Meanwhile, the Ifo reported that German business confidence unexpectedly rose to the highest level on record during February. The business-climate gauge added almost a point to reach 111.2, while the assement of current conditions added almost two points to 114.7. Six-month expectations inched up slightly.
Click here to read the story on the Markit report from The Wall Street Journal.
Click here for coverage of the IFO report, also form The Wall Street Journal.