The economic impulse in the Eurozone has been rising at the fastest pace in nearly 12 years, leading to the fastest job creation since the beginning of the millennium. The Purchasing Managers’ Index (PMI) rose by 58.8 points in January from 58.1 in December, according to IHS Markit. This surprisingly exceeds the preliminary growth forecast of 58.6 points, the change being mainly due to the better-than-expected performance of the service sector.
The growth is supported by the expansion of the world trade, the steadily declining unemployment and the extremely low borrowing costs due to the record-low interest rates of the European Central Bank (ECB).
As companies continue to accumulate orders pushing them to the limits of their capacity, according to IHS Markit. The rapid pace of job creation is likely to help make growth less dependent on monetary support.
The ECB is currently considering when to go ahead with extraordinary monetary measures that include negative interest rates and a bond purchase program.
The Eurostat data show that Eurozone economic growth accelerated to 0.6% in the fourth quarter of 2017. London-based IHS Markit says the data will probably be upgraded to 0.8%, in line with the trend to revise gross domestic product statistics.
At the same time, the growth in services and manufacturing has contributed to higher price pressures, with manufacturing costs rising at the fastest pace since mid-2011.