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Euro zone economy back on the boil?

Wednesday, March 05, 2014 - 01:40

Mar.05 - Euro zone private businesses enjoyed their fastest growth in more than 2-1/2 years last month. But as David Pollard reports, the decline in France continues to accelerate.

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The euro zone economy is cooking again, according to the latest reading. Restaurants and hotels just one sector that saw service output last month at its highest in two and half years. Meaning that overall activity - including manufacturing - was on the rise for the eighth consecutive month. The survey - from research firm Markit - is welcome news, say investors - though some have an appetite for more. Jeremy Cook of World First. SOUNDBITE (English) JEREMY COOK, CHIEF ECONOMIST, WORLD FIRST, SAYING: ''Until we see the actual GDP and actual output that these countries are contributing to the euro zone economy, then we can start looking at it. I don't think we can really say an economy is out of, you know, is out of the woods, when we still have 12 per cent unemployment.'' The latest numbers show Germany as the main driver. Manufacturing did slow slightly last month, but service output beat expectations and showed new orders on the up. Italy's services also beat forecasts, coming in at their highest in three years. But one sour note: firms across Europe were forced to cut prices for the twenty-second month in a row to boost demand. Adding to pressure on Mario Draghi for action against the threat of deflation, at this week's ECB meeting. IG's Brenda Kelly. SOUNDBITE (English) IG MARKET ANALYST, BRENDA KELLY, SAYING: ''Obviously, we saw a rate cut back in November from 0.5% to 0.25% and perhaps he's waiting for that to take hold. But I do feel that inflation concerns are still there and even Christine Lagarde from the IMF has pretty much indicated that the ECB need to be proactive rather than reactive." France once again disappointed - services there shrinking at their fastest rate in eight months. But there was a soupçon of good news: the 12-month outlook showed French business confidence at its highest in almost two years.

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Euro zone economy back on the boil?

Wednesday, March 05, 2014 - 01:40