Investing.com - Economic activity in the euro zone got off to a strong start in January, with employment rising at the fastest rate since 2008 amid rising optimism about the business outlook, preliminary data showed on Tuesday.
In a report, market research group Markit said that its Flash Euro Zone Composite Output Index, which measures the combined output of both the manufacturing and service sectors dipped from 54.4 in December to 54.3 in January, below forecasts for 54.5.
Growth edged slightly lower in both manufacturing and services, but in both sectors the rate of expansion remained robust by recent standards, especially in the goods-producing sector.
The flash services purchasing managers’ index declined to 53.6 this month from 53.7 in December, missing expectations for a reading of 53.9.
The preliminary euro zone manufacturing purchasing managers’ index inched up to 55.1 this month from a final reading of 54.9 in December. Analysts had expected the index to drop to 54.8 in January.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The start of the year also saw the largest monthly rise in employment since February 2008. Hiring gained momentum in both services and manufacturing on the back of sustained growth of new orders, the rate of increase of which held steady on December’s one-year high, as well as improved optimism about the year ahead.
Inflationary pressures meanwhile intensified further in January. Firms’ average input costs rose at the fastest rate since May 2011, with rates of increase accelerating in both services and manufacturing.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “The eurozone economy has started 2017 on a strong note. The January flash PMI is signalling respectable quarterly GDP growth of 0.4% with a broad-based expansion across both manufacturing and services."
EUR/USD was at 1.0745 from around 1.0750 ahead of the release of the data, while EUR/GBP was at 0.8595 from 0.8602 earlier.
Meanwhile, European stock markets were mostly lower. The EURO STOXX 50 fell 0.1%, Germany's DAX dropped 0.1%, France’s CAC 40 slumped 0.1%, while London’s FTSE 100 tacked on 0.1%.