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Eurozone economic activity survey gives mixed signals

(BRUSSELS) - A closely-watched survey indicating the rate of growth across eurozone manufacturing and services sectors hit a two-month low in March, new data showed on Thursday.

The eurozone composite output index compiled by the Markit research firm fell 0.7 points from February to 57.5 points in March. A reading above 50 indicates activity is expanding.

Markit nevertheless said the latest reading "signalled an expansion in economic activity for the 20th consecutive month" and emphasised that the "rate of growth was the second-fastest since July 2007" after a four-and-a-half year high in February.

Manufacturing output growth eased to a three-month low, the survey said, but services business activity rose "at the quickest pace since August 2007."

Once again, though, sharp divergences in economic performance could be seen between France and Germany, and the rest.

For the big two, the average rate of output expansion was "the fastest in almost five years," but growth elsewhere in the 17-nation currency area "was only modest and weaker than in February."

"The downside of the stronger growth," said Markit chief economist Chris Williamson, "is still further upward pressure on prices."

"Firms reported increased success in passing rising costs on to customers, especially in manufacturing, where factory gate price inflation is far above anything seen previously" in the survey's 13-year history.

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