© Reuters. ACTIVITY IN THE EURO AREA accelerated IN the END Of the YEAR
by Jonathan Cable
LONDON (Reuters) – activity in the euro area should loop the end of the year on a very positive note, after a month of November, loaded, shows a survey published Tuesday, which provides further evidence of the robustness of the recovery in the bloc community in 2017.
In the 19 countries using the euro, the growth has accelerated in the last month, and businesses have struggled to meet burgeoning demand, unlike the uk where the service sector has lost its dynamism against a background of concern related to the Brexit.
“It confirms that the economy of the euro zone remains in insolent health, and the last quarter of the year will be very strong, we see a lot of momentum,” said Angel Talavera to Oxford Economics.
The leading indicators of the survey of the IHS Markit suggest that the momentum will be maintained this month.
The PMI composite final of the euro zone, considered as a good indicator of growth, has confirmed the figure of 57.5 given in a flash estimate on November 23, after 56,0 in October.
It has thus reached its highest level since April 2011 and is clearly above the threshold of 50 separating growth and contraction of activity.
On the downside, the retail sales in the euro zone declined more than expected in October, according to official data released on Tuesday.
“The mild weather has weighed on clothing sales and so on sales at retail in October, but the improvement in consumer confidence to a peak of 16 years suggests that sales growth rebounded last month,” said Stephen Brown, of Capital Economics.
The growth of the services sector in Germany slowed in November, according to the PMI, but the trend remained strong, while the strong growth in France has led companies to accelerate hiring at a peak of 16 years.
In Italy, the growth of services has accelerated in November after three consecutive months of slowdown, strengthening the prospects of further expansion in the third largest economy of the euro area, although the Spain of his side has progressed at a slower pace than last month.
“There is a recovery synchronized in the euro area; it is not only a question of Germany or of a core countries to the periphery,” noted Angel Talavera.
The PMI index for the IHS Markit/CIPS survey of the services sector in the United Kingdom, however, experienced a slowdown in its growth last month, to 53.8 after a 55.6 in October.
“The political uncertainty and the slowdown in consumption will continue to constrain growth next year, even in the event of progress on the Brexit in the next few weeks,” said James Smith of in ING (AS:INGA).
The party in the northern irish DUP (democratic unionist Party) says he is very far from an agreement with the government of Theresa May on the Brexit.
The growth of new orders in the euro area has accelerated with an index to 57.3, a level unseen for seven years, compared to 56.9 in the flash estimate 56.6 in October.
Companies are struggling to meet demand, despite a sharp rise in the workforce, and the backlog of orders accumulates.
According to IHS Markit, the PMI suggests that growth in the fourth quarter in the euro area will be 0.8%, which would be higher than the median forecast of 0.6% of a survey Reuters published last week.
The PMI index of services, the main sector of activity of the euro area, has risen sharply to 56.2 in November, a high of six months, as against 55.0 in October.
The index, which measures producer prices in services remained to 52.1 in November, one of its highest levels since the beginning of the year.
These signs of upward pressure on prices in the euro area, against a background of sustained growth, will be welcomed by the european central Bank which is struggling for years to push inflation towards its target of close to 2%.
(Claude Chendjou for the French service, edited by Véronique Tison)