The Eurozone is growing at its fastest rate for four-and-a-half-years – Markit’s purchasing managers’ index
The Eurozone economy is growing at its fastest rate for four-and-a-half-years, but is unlikely to be growing fast enough to deter policy makers from expanding the currency-bloc’s €1.1 trillion (£770bn) asset purchase programme, economists have said.
Markit’s flash purchasing managers’ index (PMI) – compiled from a survey of businesses and released this morning – climbed to a score of 54.6 in November. The score is a 54-month high and is further above the 50 level that signals no growth. The flash figures are estimates based on around 85 per cent of the final data.
Businesses reported the strongest rate of employment growth and new orders since 2011.
The PMI is now pointing to a slightly faster rate of growth of around 0.4 per cent, possibly even 0.5 per cent in the final three months of 2015, according to Markit chief economist Chris Williamson.
Despite the index pointing to stronger growth, economists remained underwhelmed by the Eurozone’s economic recovery and are betting that the European Central Bank (ECB) will expand its asset purchase programme as it has been signalling.
Williamson said:
With recent comments from ECB chief Mario Draghi highlighting how the central bank remains disappointed with the strength of the upturn at this stage of the recovery, November’s slightly improved PMI reading will no doubt do little to dissuade policymakers that more needs to be done at their December meeting to ensure stronger and more sustainable growth.
Growth in Germany, the Eurozone’s biggest economy, accelerated to a three-month high. However, Markit identified France, the Eurozone’s second biggest economy as an area of weakness – its PMI dropped to three-month low.
The asset purchase programme, also called quantitative easing, is designed to pump newly created money into the economy, with money growth in the Eurozone having been weak since the 2008-9 recession. The ECB has said it can expand the programme by increasing the monthly rate of purchases from €60bn, extending the planned end-date past September 2016, or buying debt with a longer maturity.