AMSTERDAM: The European Central Bank’s defibrillator for the Eurozone economy appears to be working: the economy is growing at its fastest rate in nearly a year, and the threat of deflation, which had everyone spooked only four months ago, appears to be waning, according to surveys out.
However, it’s a different story still in China, where a parallel survey showed the manufacturing sector treading water in March, continuing to cut prices and shed labor.
Research firm Markit said its Purchasing Managers’ Index for the Eurozone hit a 10-month high of 52.2, up from an initial estimate of 51.9 and up from 51.0 in February. Activity accelerated in three of the four biggest Eurozone economies–Germany, Italy and Spain, while in France the manufacturing sector continued to contract, albeit at a slower pace.
More than anything else, it’s the fall in the euro since the ECB announced its quantitative easing policy that has helped, making Eurozone exports cheaper for the rest of the world, especially the U.S.. New export orders rose to their highest in 11 months, encouraging manufacturers to hire at the fastest rate in over three and a half years.
Nick Kounis, an economist with ABN Amro in Amsterdam, said the figures suggest gross domestic product will have grown at around an annualized rate of 1.5% in the first quarter, its strongest performance in four years. He also reckons that, with loose ECB policy creating a strong cyclical tailwind, that pace will rise to over 2% in the second half of the year.
