Growth in eurozone business activity near four-year high

Business output in the eurozone grew at its fastest rate in nearly four years in March, a closely watched survey suggests.

The CIPS/Markit composite purchasing managers' index (PMI) rose to 54.1, compared with 53.3 a month earlier - it's highest level in 46 months.

Any reading above 50 indicates growth while a reading below 50 points to a fall in activity.

Markit said the survey pointed to first-quarter economic growth of 0.3%.

That would match the eurozone growth figure for the final three months of 2014.

It said the improvement in business output was the result of growth in new orders that had increased at their fastest rate since 2011.

Employment also grew at its fastest rate since August 2011.

Job creation in the service sector "held steady" near February's four year high, Markit said, while in the manufacturing sector it grew at its quickest pace since April last year.

Crucially, the survey showed that deflationary pressures eased in March with prices falling at the slowest rate since July. Markit said this reflected the need for some firms to pass on costs to customers

Upturn

It added there was some anecdotal evidence that the European Central Bank's (ECB) stimulus measures were beginning to be felt.

Manufacturing prices rose for the first time in seven months, albeit only modestly.

Meanwhile, in the service sector, prices fell, but the rate of decline was the weakest for nine months.

Chris Williamson, chief economist at survey compiler Markit, said the survey results indicated some impetus from the ECB's economic stimulus programme, which began at the start of the month, although it was coming "at a time when there was already growth".

He added: "All the indicators are pointing to a further upturn, firms are taking on staff and it augurs well for the year ahead."

Separate PMI surveys for Germany and France, the eurozone's two largest economies, were also released.

Business activity in Germany rose to to its highest level in eight months as new orders hit a nine-month record.

German factory output was its highest for nearly a year catching up with the strong pace of growth in the service sector, which hit a six-month high.

The French economy also saw business activity increase for a second month, although at a slightly more modest pace than in February, when it hit a 42-month high.

Business output in France is still running well below that of Germany. However, new orders were at their highest level sine August 2011.

But French manufacturing output fell for the tenth month in row.

Howard Archer chief UK and European economist at IHS Global Insight called the latest PMI "highly encouraging" adding the improvement in manufacturing activity was welcome.

"It is not just the headline figures that are encouraging but the whole tone of the surveys. Eurozone economic activity is strengthening as very low oil prices, a weak euro, major ECB stimulus and much reduced fiscal headwinds foster an improved growth environment," he added.