Eurozone economic activity survey gives mixed signals
(BRUSSELS) - A closely-watched survey indicating the pace of growth across the eurozone logged a 43-month high for the services sector in March, upwardly-revised EU data showed on Tuesday.
The composite eurozone index for manufacturing and services output compiled by the London-based Markit research firm fell 0.6 points from February to 57.6 points in March, a slight improvement from a previous estimate of 57.5 points.
Any reading above 50 indicates activity is expanding.
Markit said the latest reading signalled an expansion in economic activity for the 20th consecutive month and emphasised that the acceleration in services sector activity was the strongest since August 2007.
Manufacturing output growth, however, eased to a three-month low and once again sharp divergences in economic performance could be seen between France and Germany, and the rest.
"Signs of weakness remained very much in evidence" outside the big two, with Spain falling back into a "services-led contraction and the downturn in Greek manufacturing continued," the survey said.
"Although the debt crisis in the periphery was affecting confidence, there was no evidence that the crisis in Japan had affected business materially," said Markit chief economist Chris Williamson.
"The unrest in the Middle East and North Africa, on the other hand, continued to have an impact via higher oil prices," he warned, highlighting rising input costs "at a rate approaching the near eight-year highs seen in 2008."
According to London-based IHS Global Insight analyst Howard Archer "the key question is can the Eurozone sustain this apparent improved growth in the early months of 2011 as fiscal tightening increasingly kicks in across the region?"
He added: "There can be little doubt that the European Central Bank will deliver a 25 basis point interest rate hike from 1.00 percent to 1.25 percent on Thursday -- even though higher interest rates threaten to add to the problems of Greece, Ireland, Portugal and, even Spain."