Eurozone Business Activity Rises at Fastest Pace in More Than Five Years

Business activity in the euro area accelerated at its fastest pace in more than five years in December while the risk of political turmoil amid major elections across Europe this year clouds the economic outlook, IHS Markit said.

The composite purchasing managers’ index, which collates the manufacturing and service sector surveys, rose to 54.4 in December from November’s 53.9, the fastest pace of expansion since May 2011, IHS Markit, which compiles the indicators, said on Wednesday.

The growth pickup was driven by manufacturing, with production increasing at the quickest pace since April 2014. Service sector activity also rose, with the rate of increase staying close to November’s 11-month high, the report showed. The reading signals a 0.4% expansion of GDP in the fourth quarter, according to Markit.

The PMI surveys will be welcome news to European Central Bank President Mario Draghi and his fellow rate setters who as recently as March unleashed an unprecedented round of monetary easing. The ECB last month extended its quantitative easing program, which was due to end in March, until at least December 2017. While they tapered the monthly bond purchases by 20 billion euros ($21 billion) to 60 billion euros, they also expanded the pool of eligible assets.