This morning a veritable stream of economic reports signalled that the Eurozone’s economic recovery continued at the beginning of this year.
Firstly, the final services PMI readings for France, Italy, Germany and the Eurozone for February came in above the levels previously estimated.
The French measure came in at 47.2 rather than 46.9, the Italian measure showed a surprise return to growth by jumping to 52.9 instead of 49.9, the German gauge edged up to 55.9 from 55.4 and the Eurozone’s services PMI came in at 52.6 rather than 51.7.
In a statement issued with the Eurozone’s composite PMI economist Chris Williamson observed that ‘The final PMI indicated that the Eurozone economy grew at the fastest rate since June 2011, contrasting with the slowdown signalled by the flash reading. The survey suggests the region is on course to grow by 0.4-0.5 per cent in the first quarter, which would be its best performance for three years.’
Williamson added; ‘There was good news on the employment front too. Although only marginal, the increase in headcounts was nevertheless the first improvement seen since 2011 and suggests that companies are gaining confidence about the sustainability of the upturn’.
It wasn’t all positive news however, and Williamson did remark on the continued regional disparity within the Eurozone, referencing France as a particular concern.
This upbeat news was followed by a report which showed that the Eurozone’s economy expanded by 0.3 per cent in the fourth quarter of 2013, quarter-on-quarter, and was up by a seasonally adjusted 0.5 per cent on the year.
Separate figures then revealed a whopping surge in Eurozone retail sales, with sales leaping by 1.6 per cent in January month-on-month, double the 0.8 per cent gain forecast.
December’s sales decline was positively revised to 1.3 per cent.
On the year sales were up 1.3 per cent. Economists had expected an annual decline of 0.2 per cent.
The Euro strengthened after the data was published as investors bet that the encouraging figures would prevent the European Central Bank from introducing additional stimulus measures when it gathers tomorrow.
At least month’s meeting ECB President Mario Draghi intimated that the central bank would decide whether rates should be cut further during the March gathering.
In the opinion of economist Howard Archer; ‘The improvement in services activity may slightly ease pressure for further ECB simulative action. But it still looks touch and go whether they will act.’
Euro gains against the Pound were slightly limited as the British asset was supported by positive UK news.
Both the ECB and Bank of England policy meetings will be of considerable interest tomorrow. While the ECB’s next steps are far from assured, the BoE is expected to leave policy unaltered.
Industry experts will also be looking to German factory order figures for guidance.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.8227,
Euro,,US Dollar,1.3716,
Euro,,Canadian Dollar,1.5189,
Euro,,Australian Dollar,1.5288,
Euro,,New Zealand Dollar,1.6337 ,
US Dollar,,Euro ,0.7290,
Pound Sterling,,Euro,1.2155,
Canadian Dollar,,Euro,0.6583,
Australian Dollar,,Euro,0.6531,
New Zealand Dollar,,Euro,0.6124 ,
[/table]
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