Eurozone economy moved up a gear in February
|EUR
“The eurozone economy moved up a gear in February. The rise in the flash PMI to its highest since April 2011 means that GDP growth of 0.6% could be seen in the first quarter if this pace of expansion is sustained into March.”
- Chris Williamson, IHS Markit
Data released on Tuesday showed economic activity in the Euro zone perked up over the month of February, nearing a six-year high. The Markit flash PMI for the shared currency area hit the highest level in 70 months, surging to 56.0 in February from 54.4 registered in the preceding month and beating analysts’ expectations for a 54.3 reading. Sufficient growth was registered in both services and manufacturing, with expansion in the latter sector outpacing services growth rate. More specifically, the manufacturing PMI climbed to 55.5 over the course of February compared with the previously reported 55.2, while experts penciled in a reading of 55.0. For the services industry, the purchasing managers’ index rose to 55.6, up from 53.7 observed in January. The gain came in ahead of market expectations for the index to stay unchanged from the previous month.
Separately, Germany and France released their business activity figures, with the composite PMIs in the abovementioned countries jumping to 56.2 and 56.1 respectively. Elsewhere in the common currency area, economic activity growth rate peaked to a 14-month high.
GBP
“The weak result was mainly due to a change in the way that the ONS measures corporation tax revenue.”
- Scott Bowman, Capital Economicssazw
Britain’s public sector budget surplus expanded less than expected in January, official figures revealed on Tuesday. According to the Office for National Statistics, the UK public sector’s net borrowing, which excludes state-owned banks, registered a budget surplus increase to £9.4B in the first month of 2017, the highest figure since 2000, compared to the £9.1B a year ago. Nonetheless, the January surplus growth was worse than analysts' expectations for a £14.7B hike. Moreover, borrowing requirements for the first 10 months of 2016-2017 fiscal year decreased to £49.3B from £62.9B. That was the lowest 10-month budget deficit in nearly nine years. Furthermore, the ONS said net debt rose to 85.3% of GDP from 83.4% recorded in the preceding year. Due to certain changes in methodology of the latest data release, the report also revealed there was a £2.1B transfer from the BoE Asset Purchase Facility Fund. Overall, the confidence in the near-term budget outlook is likely to appreciate due to solid revenue growth.
Separately, the BoE Governor Mark Carney, speaking on the February inflation report, pointed out that inflation is entirely affected by the currency, while rates are set to rise more quickly than expected.
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