Employment in the Eurozone economy increased at its fastest rate since before the global financial crisis hit in 2008, as surveys of business activity showed healthy activity across the region to start the year.
Germany’s powerhouse industry led the way, as activity in the manufacturing sector hit a three-year high.
The German manufacturing purchasing managers’ index (PMI) for January rose to 56.5, up from 55.6 in December, according to IHS Markit. This marks the strongest expansion (denoted by a reading above 50) since January 2014.
Expansion in Germany’s service sector underperformed while remaining in solid expansionary territory, but the strength of new orders across the Eurozone contributed to the strong employment growth.
Philip Leake, an economist at IHS Markit said: “The first flash PMI of 2017 highlighted diverging performance in Germany’s private sector economy. Whereas manufacturers signalled an accelerating upturn fuelled by stronger domestic and international demand, growth slowed in the dominant service sector.”
Meanwhile, growth in France’s manufacturing sector slowed marginally but was offset by a big rise in the strength of its services sector to push its composite measure (which takes into account activity across the economy) to its highest level for five and a half years.
Managers throughout the Eurozone reported an increase in inflationary pressure, according to the surveys, as a small underlying expansion in the economy and a big increase in the price of oil starts to feed through.
The surveys also found business expectations rising to their highest levels since data was first collected in July 2012, indicating an improving outlook for European business despite looming threats to recovery.
Chris Williamson, chief business economist at IHS Markit, said: “Firms’ expectations about the year ahead are running at the highest for at least four-and-a-half years, highlighting how political risk continues to be widely eschewed, with companies focusing instead on expanding their sales in the coming year.”