Euro zone business activity made surprise return to modest growth in January, survey shows

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S&P Global’s flash Composite PMI adds to signs that the downturn in the euro zone may not be as deep as feared and that the currency union may escape recession

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.

 

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