Feb 4, 2015 4:54 AM

Survey finds eurozone began 2015 stronger than thought

The Associated Press

LONDON (AP) Maybe all the doom and gloom surrounding the 19-country eurozone has been overdone.

A closely watched survey is indicating that the eurozone economy started 2015 on a far more solid footing than previously thought.

Financial information company Markit said its purchasing managers' index, a gauge of business activity, spiked to a six-month high of 52.6 points in January from the previous month's 51.4. January's outcome was better than the initial estimate of 52.2 and points to a quarterly growth rate of 0.3 percent low by historical standards but largely better than growth recorded over the past couple of years. Anything above 50 indicates expansion.

Among the big-four nations, Markit found output expanded in Germany, Italy and Spain, but the downturn in the French economy extended into its ninth month. Markit also found that the rate of job creation inched up to its best level since mid-2011.

Markit also laid out the hope that the European Central Bank's recent decision to back a 1 trillion-euro ($1.12 trillion) stimulus should lift growth further.

"The move to full-scale quantitative easing by the ECB should help drive even stronger growth in coming months," said Chris Williamson, chief economist at Markit.

Ostensibly, the stimulus is meant to get inflation in the eurozone back to target. At minus 0.6 percent in the year to January, the ECB is trying to bring up inflation in the economy so the general level of prices rises at just below 2 percent. Markit's survey showed that price pressures remain benign in light of the sharp fall in oil prices over the past few months. However, it said lower oil prices, most visible at the pump, should help boost consumers' spending power.

The eurozone has suffered a number of false dawns over the past few years and Williamson said risks remain.

"There are clearly many risks to the outlook, including any escalation of the Greek crisis and the political fracas with Russia," he said.


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