German and French output growth keeps Eurozone expansion at six-year high

 
Jasper Jolly
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German industry has been one of the recent drivers of growth (Source: Getty)

German growth hit the fastest expansion in six years in May according to a closely watched survey, raising expectations that second-quarter GDP figures will show momentum building in the Eurozone.

Output from the German economy jumped to a six-year high of 57.3 points, according to the purchasing managers’ index (PMI) compiled by IHS Markit, boosted by the country’s mighty manufacturing sector. A reading above 50 indicates an expansion in the economy.

The PMI readings point to the strongest quarter of German growth since the first half of 2011, when the Eurozone debt crisis stymied expansion around the bloc.

Read more: Whisper it, but the European economy is in surprisingly good shape

A separate poll found business confidence rising to an all-time high in a survey which has been running since 1991. "The mood among German business was euphoric in May," said Clemens Fuest, president of the ifo Institute, which compiles the data.

Growth was not limited to Europe’s largest economy, with the region-wide PMI reading remaining unchanged at a six-year high of 56.8 points. That points to an acceleration from the 0.5 per cent quarterly GDP growth seen in the first three months of 2017.

Chris Williamson, chief business economist at IHS Markit said: “The PMI data indicate that Eurozone growth remained impressively strong in May. Business activity is expanding at its fas test rate for six years so far in the second quarter, consistent with 0.6 to 0.7 per cent GDP growth.”

Output growth in France accelerated to a six-year high during the month, boosting Emmanuel Macron at the start of his Presidency.

The French composite output index, rose to 57.6 points, its highest since 2011.

The French services sector, which at around 79 per cent of GDP makes up a similar proportion of the economy to the UK, saw its strongest expansion in six years, although the manufacturing sector dipped slightly from recent highs.

Read more: Eurozone growth remains steady as economic recovery continues to roll on

Alex Gill, an economist at IHS Markit, said: “The numbers continue to paint a positive picture of the French private sector economy. Furthermore, with May’s conclusion to the presidential elections, the road looks set fair for future growth.”

In further good news for Macron, the leader of the En Marche political movement he founded a year ago, the job creation rate rose to its highest since August 2011. Tackling France’s stubbornly high unemployment is one of Macron’s main priorities as President.

Meanwhile the surveys also showed signs of a rise in inflationary pressure, with job creation across the Eurozone rising to one of its strongest readings in the last decade and selling prices for goods rising at the second-fastest rate since July 2011.

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