Eurozone activity hits 31-month high as recovery speeds up

(BRUSSELS) - Activity in the eurozone private sector economy rose to a 31-month high in January as economic recovery gathered pace across the region, a key indicator showed on Thursday.

Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for January rose to 53.2 points against 52.1 in December, the seventh monthly rise running and the fastest rate of growth since June 2011.

"The eurozone's recovery gained further momentum," said Markit's chief economist Chris Williamson. "The upturn in the PMI puts the region on course for a 0.4-0.5% expansion of GDP in the first quarter."

"A 0.6-0.7% expansion in Germany helps offset a flat-looking picture in France," he added, saying that "the periphery is showing clear signs of starting 2014 on a firm footing."

The index is a leading indicator of how the economy is performing, and is closely watched by analysts and economists because it is regarded as broadly accurate.

Manufacturing led the recovery with output, new orders and new export orders all showing the largest monthly rises since April 2011. Services however grew more moderately.

"The upturn remains fragile," Williamson said. "Companies cut employment again and selling prices continued to fall amid still weak demand."

Growth disparities were "also a concern", he added, with output falling for a third month in France though the rate of decline had eased.