Eurozone PMI Beats Forecasts, Pointing to Stronger Growth
September 22 2017 - 5:32AM
Dow Jones News
By Paul Hannon
The eurozone economy found fresh momentum in September and may
have accelerated in the third quarter as a whole, according to
surveys of purchasing managers released Friday.
The pickup is the latest positive surprise from an economy that
has already outperformed most expectations this year. As it entered
2017, most economists expected to see a slowdown from a
disappointing 2016. Instead, they have been forced to raise their
projections, and the European Central Bank now thinks the economy
will grow more rapidly than it has in a decade.
Data firm IHS Markit on Friday said its composite Purchasing
Managers Index for the eurozone -- based on survey responses from
5,000 manufacturers and service providers -- rose to 56.7 in
September from 55.7 in August, reaching its highest level since
May.
That was a surprise, with economists surveyed by The Wall Street
Journal last week forecasting a drop to 55.6. A reading above 50
signals an increase in activity, while a reading below signals a
decline.
The PMIs for July and August had suggested the eurozone economy
was slowing very slightly, in line with economists' expectations.
But the September jump has raised the average reading for the third
quarter. Chris Williamson, IHS Markit's chief economist, said that
points to quarter-to-quarter growth of 0.7%, up from 0.6% in the
three months to June.
"The eurozone economy ended the summer with a burst of activity,
with the PMI signaling renewed impetus to already-impressive rates
of growth of output, order books and employment during September,"
he said.
The September revival was driven by Germany and France, the
eurozone's largest members. France's PMI hit its highest level in
76 months, while its German equivalent was the highest in 77.
Across the eurozone, manufacturers led the September charge,
with activity growing at the fastest rate in more than
six-and-a-half years as exports continued to rise.
"Today's release confirms our view that, despite some concerns
amongst investors, the recent appreciation of the euro is not
sufficient to derail the region's economic momentum," said Julien
Lafargue, an equities strategist at J.P. Morgan Private Bank.
The eurozone's accelerating growth has reduced the need for ECB
stimulus, and the central bank has signaled that it will next month
announce plans for phasing out its bond-buying program. The
strength of the PMI, which is closely watched by ECB policy makers,
may help sway any who doubt that is the right course of action.
However, there are few signs the pickup in growth has
transformed the outlook for inflation, which is well below the
ECB's target of just under 2%.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
September 22, 2017 05:17 ET (09:17 GMT)
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