Euro zone business activity made a surprise return to modest growth in January, adding to signs the downturn in the bloc may not be as deep as feared and that the currency union may escape recession, a survey showed.
“The rise in the purchasing managers’ indices is likely to fuel hopes among many that the economy in the euro area might just escape a recession after all,” said Christoph Weil at Commerzbank. Pressure on Germany’s economy, Europe’s largest, eased further in January as inflation slowed and businesses looked to the new year with optimism, a sister survey showed, although sentiment was still shy of predicting a return to growth.
The dollar languished near a nine-month low against the euro on Tuesday as markets continued this year’s buoyant mood after the PMI data and a slew of corporate earnings. Despite consumers facing large bills, demand only waned slightly. The new business index was just shy of the break-even mark at 49.8, up from 48.4.
Like in the services PMI, the input prices index fell but firms raised their charges at a faster rate. The output prices reading nudged up to 61.4 from 61.2 but was still far lower than it has averaged over much of the last three years.