Eurozone economic growth ‘strongest in over five years’

The euro-area economy, comprising 19 European nations including Germany, recorded its strongest performance since May 2011 according to IHS Markit.

The London-based business information and analysis group said that its monthly composite purchasing managers’ index (PMI) rose to 54.4 in December from 53.9 in November, the best reading in 67 months. A robust manufacturing PMI reading of 54.9 contrasted with a services PMI reading of 53.7 A figure above 50 indicates economic expansion; beneath 50 contraction.

Strength in both the manufacturing and service sectors was partly to a weaker euro, reported Markit. Economic expansion was reported by the region’s four biggest economies, with Spain recording the strongest growth followed closely by Germany.

“The final PMI data signal an even stronger end to 2016 than the preliminary flash numbers, though whether this provides a much-needed springboard for the euro area’s recovery to gain further momentum in 2017 remains very uncertain,” said Chris Williamson, chief business economist at IHS Markit. “Much depends on political events over the course of the next year.”

Growth may also have been helped in December by the European Central Bank’s (ECB) decision to extend its asset-purchase programme through to the end of 2017. The move was influenced by subdued inflation, uncertainty from this year’s elections in France, Germany and the Netherlands and the start of negotiations on the terms of the UK’s withdrawal from the European Union (EU).

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