The euro zone's dominant service sector grew at its fastest pace in over two years during early December while the manufacturing sector grew at a rate not seen since March 2008, key surveys showed today.
Markit's Eurozone Flash Service Purchasing Managers Index, made up of surveys from around 2,000 businesses ranging from banks to cafes, rose more than expected to 53.7 in December from 53.0 in November, its highest since November 2007.
That marks the fourth month the index has been above the 50.0 mark that divides growth from contraction, and was ahead of economists' expectations for it to hit 53.2.
"It's positive overall ... but we have to keep in mind the backdrop of where this is coming from," said Rob Dobson at survey compiler Markit.
The euro zone economy had shrunk for five consecutive quarters but returned to growth of 0.4 per cent in the July-September period and is expected to grow 0.5 per cent in the current quarter.
The new business index climbed to a 25-month high of 53.0 from 51.2, a good sign that business activity is set to rise again next month as those orders are filled.
The euro zone manufacturing sector, which drove a large part of the return to growth in the third quarter, grew at its fastest pace in 21 months. The flash manufacturing index rose to 51.6 from 51.2 in November, pipping forecasts for 51.5.
The manufacturing output index rose to a 27-month high of 55.2 from 54.8 in November.
The backlogs of work index jumped to 51.9 this month from 50.2 in November, suggesting there was more demand than firms were currently able to meet.
The index was languishing at just 29.2 this time last year, the lowest in the survey's 12-year history.
The rise across the services and manufacturing sectors took the Composite index to a 26-month high of 54.2 from 53.7 in November, ahead of economists' expectations for 53.9.
While the situation may be improving, firms are still shedding jobs at a rapid pace to cut costs and the composite employment index remained negative for the eighteenth month at 46.5, up from November's 44.9.
Official data released earlier this month showed unemployment remained stable at an 11-year high in October of 9.8 per cent but analysts suggest the situation may be worse than reported with many firms extending short working hours.
Reuters