Investing.com - Economic activity in the euro zone in February rose at the fastest pace since 2011, boosting optimism over the region's prospects, preliminary data showed on Tuesday.
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 rose from 54.4 in January to 56.0 in February, above forecasts for 54.3. The latest reading was the highest since April 2011.
Growth accelerated in both manufacturing and services to rates not seen since early-2011, with the goods-producing sector again enjoying the faster rate of expansion.
The preliminary euro zone manufacturing purchasing managers’ index inched up to 55.5 this month from a final reading of 55.2 in January. Analysts had expected the index to drop to 55.0 in February.
The flash services purchasing managers’ index climbed to 55.6 this month from 53.7 in January, easily surpassing expectations for a reading of 53.7.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Job creation was the best seen for nine and a half years, order book growth picked up and business optimism moved higher, all boding well for the recovery to maintain strong momentum in coming months. Inflationary pressures meanwhile continued to intensify.
February also saw the largest overall increase in new business since April 2011.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “The euro zone economy moved up a gear in February. The rise in the flash PMI to its highest since April 2011 means that GDP growth of 0.6% could be seen in the first quarter if this pace of expansion is sustained into March."
He added that the "ECB will be cheered by the signs of stronger growth and further upturn in price pressures, though will no doubt remain concerned that elections and Brexit could disrupt the business environment this year. No change in policy therefore looks likely until at least after the German elections in September.”
EUR/USD was at 1.0563 from around 1.0565 ahead of the release of the data, while EUR/GBP was at 0.8496 from 0.8500 earlier.
Meanwhile, European stock markets were mostly lower. The EURO STOXX 50 fell 0.2%, Germany's DAX tacked on 0.2%, France’s CAC 40 slumped 0.2%, while London’s FTSE 100 shed 0.4%.