Euro zone service growth hits 23-month high

The euro zone's service sector grew at its fastest pace in 23 months in December, according to new data.

The euro zone's service sector grew at its fastest pace in 23 months in December, according to new data.

The RBS/NTC Services Purchasing Managers' Index echoed the growing business confidence shown in a companion survey of euro zone manufacturers published earlier this week.

In the services survey, which covers around 2,000 companies ranging from airlines to restaurants and computing businesses, the headline Business Activity Index rose for the fourth consecutive month to 56.8 in December from 55.2 the previous month, hitting its highest level since January 2004.

This took the index further above the 50 divide that splits growth from contraction and was more than a point clear of the consensus forecast of 55.4.

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Chris Williamson, chief economist at NTC Research, which compiles the euro zone surveys, said the upturn "was driven by growth of incoming new business, which rose at the fastest rate since February 2004 and caught a lot of companies by surprise".

The survey also found employment growth hit a four-and-a-half-year high as firms hired more staff to meet new business demand

The rate of business activity growth improved in all big four euro zone countries - Germany, France, Italy and Spain - with France putting in the strongest performance, and the employment index rose to 52.6 in December - its highest level since July 2001 - from 51.5.

The equivalent survey of US services companies will be published this afternoon by the Institute for Supply Management and is forecast to edge up to 59.0 in December from 58.5 the previous month.