Eurozone economy gains pace as France expands, says survey

BRUSSELS: Business activity in the eurozone accelerated in December, a key survey showed Thursday, as job creation held at its the fastest pace in 17 years on the back of solid growth in France and Germany.

Analysts said the rise in the headline readings of the survey by data monitoring company IHS Markit confirmed that the eurozone economy was booming despite the shock of Brexit and post-election uncertainty in Germany.

The data lands as the European Central Bank is expected to highlight the bloc's economic strength in new forecasts Thursday as markets keep an eye for signs of further cuts to its massive support for the economy.

A purchasing managers' index (PMI) compiled by Markit rose to 58.0 in December after 57.5 in November, the group said in a statement. Anything above 50 signifies an expanding economy.

"France has been the big surprise this year, rapidly pulling out of its malaise to help shift the eurozone expansion into a higher gear," said Chris Williamson of IHS Markit.

Williamson added that household demand in Europe "is being buoyed by the improved labour market, with new jobs being created at a pace not seen for 17 years over the past two months."

France surged to its highest growth pace since the first half of 2011 and beating Germany for the third month running, though both countries recorded strong gains.

Given the latest evidence of healthy growth and falling unemployment, the ECB will be comforted in its decision in October to slash by half the mass bond-buying it has used to buoy the eurozone.

Williamson noted that "the robust growth of demand and tightening labour market hint at rising core inflationary pressures as we move through 2018."