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Eurozone business activity highest since 2006: survey

(BRUSSELS) - Eurozone manufacturing and service activity in February hit levels last seen in July 2006 but inflation, an increasing concern, also jumped sharply, a closely watched survey showed on Monday.

The Eurozone composite output index compiled by the Markit research firm rose 1.4 points from January to 58.4 points in February.

It said the latest reading "signalled the strongest monthly expansion since July 2006 and one of the strongest growth rates in the near 13-year history of the survey."

Service business activity alone rose to 57.2 points from 55.9 points in January, with manufacturing output at 61.1 points, up from 59.4 points for a 10-month high, Markit said in a statement.

The eurozone manufacturing sector purchasing managers index, a forward looking measure, hit 59 points, its highest since June 2000, up from from 57.3 points.

A reading above 50 indicates activity is expanding.

Markit said the figures showed "growth has accelerated sharply since hitting a low last October, with manufacturing continuing to lead the renewed upturn in February... the service sector has also seen an improved performance."

It said activity accelerated in Germany, reaching a record high, and in France, where it hit a six-month high, noting an improvement outside of the two main economies, especially in manufacturing.

Employment rose for a 10th successive month, it noted, again mostly concentrated in manufacturing, including outside of France and Germany, "albeit only very marginally," for the first time since February 2008.

"Prices charged for goods and services rose at the fastest rate since July 2008, showing the largest monthly acceleration since data for this series were first collected in 2002," Markit said in a statement.

Chris Williamson, Markit chief economist noted that "faster eurozone growth was accompanied by a further surge in price pressures in February.

"With output rising at the strongest rate for nearly five years, GDP growth is likely to have accelerated sharply from the disappointing 0.3 percent increase seen in the final quarter of last year," Williamson said.

"Growth of 0.7 percent could be seen for the first quarter," he said, noting that with the rest of the eurozone starting to pick up, "growth divergences are therefore starting to narrow."

He said signs of increasing inflation pressures were "less welcome."

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