Eurozone Growth Accelerated at End of 2015

Dow Jones Newswires

Eurozone economic growth appears to have accelerated in December, shrugging off the impact of terror attacks on Paris and security concerns elsewhere, with Italy recording its most rapid expansion in almost five years. Surveys of purchasing managers released Wednesday suggest eurozone economic growth likely picked up in the final three months of the year. That contrasts with similar gauges for China, which point to a further slowdown. But despite what appears to be a solid end to the year for the currency area's economy, the surveys found that businesses continued to cut their prices, an indication that the European Central Bank will find it difficult to raise the inflation rate to its target of just under 2%. Data provider Markit said a headline measure of activity based on surveys of 5,000 companies around the eurozone, known as the composite purchasing managers index, rose to 54.3 in December from 54.2 in November. A reading above 50.0 indicates an increase in activity, while a reading below that level indicates a decline. Markit had previously estimated that the measure fell to 54.0, which would have indicated a slight slowdown in activity. The surveys confirmed that France's economy slowed following the Nov. 13 terror attacks in Paris, which left 130 people dead, and a subsequent tightening of security around the country. The composite PMI for France fell to 50.1 from 51.0 in November, its lowest level in 11 months as the services sector slipped into a slight contraction. However, the French slowdown had little impact elsewhere. While Ireland continued to be the most rapidly growing eurozone member, activity in Italy surged as the year came to an end. Italy has long been a laggard in the eurozone's recovery. But at 56.0, the country's composite PMI hit its highest level in 58 months, and indicated that activity there grew more rapidly than in Germany or Spain. "The PMI data show that the recovery in Italy's economy has moved up a gear in the final quarter, and has solid momentum heading into the new year," said Phil Smith, an economist at Markit. The surveys suggest the eurozone's economic expansion will continue in coming months, since new orders continued to rise, spurring businesses to hire additional workers at the fastest pace since may 2011. But even against that positive background, businesses cut their prices for the third straight month, an indication that without a further significant pickup in growth, the ECB faces a struggle to raise the annual rate of inflation to its target of just under 2%. On Dec. 3, the ECB announced a cut in its already negative deposit rate, and an extension of its bond-buying program to March 2017 from a tentatively scheduled completion date of September 2016. But figures released Tuesday showed the annual rate of inflation remained at just 0.2% in December, well below the ECB's target of just under 2%. Write to Paul Hannon at

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