Business activity in Eurozone accelerated in December

Business activity in Eurozone accelerated in December, reporting most active month for the last calendar year. The industrial production expanded at the fastest pace since April 2011, which is another sign of recovery of the currency bloc.

The increase in the Purchasing Managers’ Index (PMI) suggests that the modest recovery in the currency union is gaining a stronger momentum at the end of the year. The broader index in industry and services rose to 54.9 points in December. The evidence is consistent with the original data from December 15, while the index in November was at a level of 53.7 points.

The higher cost of imports, due to weaker currency, combined with the increased commodities prices have led to the sharp inflation of the average costs for purchases of more than five and a half years.

The European Central Bank has expanded its quantitative easing program at least until the end of the year, as it seeks to return to growth in consumer prices to its target of just below 2%. While inflation looks set to accelerate in coming months, some analysts are concerned that the core inflation, except that for energy and food, has not shown any convincing upward trend.

The manufacturers in the Eurozone enter in 2017 with a strong base, having ended 2016 with output growth. The politicians will be doubly delighted by improvements aspect of the production, accompanied by increasing price pressure.

The PMI index grows in all seven countries, with the strongest growth was recorded in the Netherlands and Austria. The growth in Germany is the strongest of three years, in France is the strongest of more than five years, and in Spain strongest in 11 months. The growth rate of Italy is improving and contraction in Greece reduced. The average PMI index for the Eurozone for 2016 is the highest since 2010.

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