Euro zone economy bounds into Q2 with bumper growth - PMI

The euro zone economy started the second quarter with strong and sustainable growth, according to a new survey today.

The survey also showed that businesses increased activity at the fastest rate for six years as new orders stayed robust. 

IHS Markit's Flash Composite Purchasing Managers' Index, seen as a good guide to growth, climbed to 56.7 from March's 56.4, its highest reading since April 2011. 

A reading above 50 indicates growth.

That matched the most optimistic forecaster in a Reuters poll in which the median predicted a dip to 56.3. 

"The strength of growth in the first quarter surprised us and this is even better. It's very broad-based growth," said Chris Williamson, chief business economist at IHS Markit. 

"There is a good outlook for the year - it looks like the upturn has legs. With numbers like these people are going to start edging up their forecasts," the economist added. 

Williamson said the latest PMI data, if maintained, pointed to second-quarter economic growth of 0.7%, well above the 0.4% predicted in a Reuters poll earlier this week. 

Signs the economy is on a sustainable growth path, alongside inflationary pressures, will be welcomed by policymakers at the European Central Bank, who have struggled for years to achieve either, despite ultra-loose monetary policy. 

Suggesting the recovery will continue, a sub-index measuring new business only dipped to 55.8 from March's six-year high of 56.2.

Firms in the euro zone's dominant service industry increased activity faster this month, with its PMI rising to 56.2 from 56, a six-year high. 

That was above all forecasts in a Reuters poll, where the median predicted no change.

To meet the growing demand, and indicating confidence about the months ahead, hiring remained vigorous. The employment index held steady at 54.4, its highest since November 2007.

European factories also had a good start to the quarter - the manufacturing PMI climbed to a six-year high of 56.8 from 56.2, surpassing all estimates in a Reuters poll. 

Meanwhile, an index measuring output jumped to 58 from 57.5, the highest since April 2011. 

Future output, which gauges what factories think they will produce, rose to 66.9 from 66.6. That matched the highest reading of the sub-index, started in July 2012, set in January.

From rte.ie (21/4/2017)