Eurozone Services Activity Hits 6-Month High

A measure of growth in the Eurozone service sector hit a 6-month high in January of 57.9, compared with 57.2 in December, according to RBS/NTC, fueling speculation that European interest rates could see a further rise during 2007.

The results come as part of a survey by RBS/NTC which also reveals that wage inflation helped to push the price index almost 3 points to the 8-month high at 60.3, while prices charged hit a 7-month high at 54.0 from 52.7 in December. The strong wage growth indication could add ammunition to unions’ negotiations regarding further pay increases for workers.

The increase in the Eurozone employment index to 54.3 from 53.7 was the fourth-highest level since early 2001.

The strong results have confounded many analysts, who expected the services PMI to dip to 56.9 according to Reuters.

"The (European Central Bank) will be concerned by the sharp rise in both the input prices and prices charged indices for the Eurozone service sector in January," Howard Archer, economist at Global Insight, told Reuters. "While the VAT hike in Germany contributed significantly to the rise in the prices charged index, this was by no means the only factor, as prices rose across the region. Reports of improved pricing power among service providers and higher wages will be particularly worrying for the ECB."


  • The Marriner S. Eccles Federal Reserve building in Washington.

    CNBC's Fed Survey shows market pros aren't very confident the Fed can end its easy money polices without a market crash, a recession or bad inflation.

  • Merck employees walk past a Merck sign in front of the company's building in Summit, New Jersey.

    Merck reported better-than-expected results, with sales of newer drugs offsetting declining sales of drugs facing generic competition.

  • Pfizer reported higher-than-expected second-quarter earnings, helped by growing sales of its cancer medicines.

  • An attendee is silhouetted against a Microsoft poster at the Microsoft Developers Build Conference in San Francisco, April 2, 2014.

    An agency that enforces antimonopoly laws visited company offices in four cities, as the country more closely scrutinizes multinational companies.

Contact U.S. News


    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video