Europe News

Euro zone businesses see strongest quarter in 3 years

The outlook for the euro zone's private sector has been given another lift, as new data showed businesses in the region enjoyed the fastest rate of expansion in three years in the first quarter of 2014.

The upturn in the 18-member bloc's fortune was led by Ireland, where manufacturing and services data pointed to the steepest increase in output and growth surged to a seven-year record in March.

Separate data released on Thursday also brought good news for the region. The volume of retail trade in the euro area in February rose by 0.4 percent from January, slightly below the 0.6 percent forecast by a poll of Reuters analysts. Year-on-year, retail sales are up 0.8 percent in the region according to the statistical office of the European Union, Eurostat.

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Sitthixay Ditthavong

The currency union is currently enjoying its strongest growth spell since the first half of 2011, as data compiler Markit said its Composite Output index signaled output growth for the ninth successive month in March at 53.1.

Although the headline output index was lower than February's 53.3 and the earlier flash estimate of 53.2, it remained consistent with Markit's forecasts for a 0.5 percent increase in GDP for the first quarter as a whole, improving on the 0.3 percent registered in the final quarter of 2013.

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After Ireland, Germany was in second position overall despite seeing its rate of growth ease to a five-month low, down from February's 32-month high of 55.9 to 53.0.

France was a big mover in March, posting the fastest rate of expansion since January 2012 and marking the first time since October that the index has risen above the 50 mark in the country, dividing expansions in activity from contractions.

"The final PMI data for March round off the region's best quarter for three years, with the survey data signaling that the economy grew by 0.5 percent compared to the fourth quarter," said Chris Williamson, chief economist at Markit.

"It is reassuring to see services growing at the fastest rate since the first half of 2011, as this provides further signs that domestic demand is reviving," he said.

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The region saw new orders rising and a slight accumulation of backlogs of work during March. Employment has remained steady in each of the past four months and March saw further job creation in Germany and Ireland.

France enjoyed a notable shift closer to stabilization in employment following a run of job losses that started in November last year.