The euro continued to recover yesterday after a series of European business surveys painted a positive picture for the growth outlook of the region. According to purchasing managers index, businesses in the region experienced their best monthly performance since 2011. The headline figure rose from 56 to 57.5 with all the main indicators of output, demand, employment and inflation at multiyear highs for the month of November.
Most analysts had forecast the figure to remain steady, however German manufacturers in particular helped push the sub-index to its second highest level on record. With job creation hitting a 17 year high factory orders were also seen to remain resilient, with a stronger euro doing little to offset demand for services and manufacturing from outside the bloc.
Other data released yesterday included a measure of business confidence in France which reached its highest level in almost a decade. A leading French statistics agency also said that economic conditions in France have now been restored to pre-crisis level across various parts of the economy.
At the same time, growth figures for Germany showed an impressive 0.8 percent expansion in the economy for Q3 which analysts believe has likely been driven by higher exports and investment.
The findings of PMI surveys also revealed that faster eurozone growth is leading to rising inflationary pressures, with businesses increasing selling prices at their fastest pace in six years to pass higher input costs onto consumers.This will please officials at the ECB given that the bank has struggled to meet its inflation target 2%.
President Mario Draghi continues to insist that the dip in inflation is only temporary. The bank hopes to wind down its monetary stimulus policies and reduce the pace of its asset purchase programme from the beginning of next year. Despite plans to extend bond buying until at least September 2018.