Photographer: Krisztian Bocsi/Bloomberg

Euro-Area Activity Surges as Manufacturing Posts Record Growth

Updated on
  • Composite PMI advances to 58, well above key 50 level
  • Economy forecast to grow 2.3% this year, up from 1.8% in 2016

Economic momentum in the euro area unexpectedly accelerated to the fastest pace in almost seven years as manufacturing posted record growth at the end of 2017.

A composite Purchasing Managers’ Index rose to 58 in December from 57.5 in November, IHS Markit said. Economists surveyed by Bloomberg predicted a decline to 57.2. An index for Germany, the region’s biggest economy, jumped to the highest since 2011.

The report suggests that euro-zone growth has further to run as it heads for its best year in a decade. It should encourage the European Central Bank, which is set to publish updated projections for growth and inflation on Thursday, to push ahead with removing stimulus despite few signs of a sustained inflation pickup.

“The euro-zone economy is picking up further momentum as the year comes to a close,” said Chris Williamson, chief business economist at IHS Markit. “Although price pressures abated slightly in December, the robust growth of demand and tightening labor market hint at rising core inflationary pressures as we move through 2018.”

Euro-area economic growth probably accelerated to 0.8 percent in the fourth quarter, the London-based company said, with output improving in both of the region’s two biggest economies -- Germany and France.

Manufacturing continued to fuel the upswing as new orders jumped to the highest level since April 2000. Backlogs of unfinished work increased even as factories across the bloc reported record gains in payrolls.

— With assistance by Mark Evans, and Andre Tartar

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