Euro-Area Economy Is on Track for Best Quarter Since 2015

Euro-Area Economy Is on Track for Best Quarter Since 2015

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The euro-area economy may have grown at the fastest pace in more than two years in the third quarter after an unexpected upturn in September.

IHS Markit’s index of private-sector activity jumped to a four-month high of 56.7 from 55.7 in August. Economists expected a reading of 55.6. Both services and manufacturing strengthened, with a gauge for the latter reaching a level not seen in more than six years.

Markit said the economy showed a “burst of activity” in September and its surveys point to economic growth of 0.7 percent over the quarter. That would be the fastest since the start of 2015. Some companies raised concerns about the strength of the euro, but Markit said the currency appears so far to have had “only a modest impact on exports.”

At Barclays, economist Apolline Menut said the PMI surveys marked a “solid end to the quarter.” She expects economic growth of 0.5 percent this quarter and next as domestic demand offsets a moderation in net trade, though there’s a chance it could be stronger.

Separate reports on Friday showed improvements in both Germany and France this month, with the PMI for both nations hitting the highest in more than six years. Markit said Germany, the eurozone’s biggest economy, is in “rude health.”

The latest positive readings keep the 19-nation region on track for its best year since at least 2010. The euro rose on Friday and was up 0.4 percent to $1.1989 as of 10:34 a.m. in London. It’s near the highest since early 2015.

The economy’s outlook got another upgrade this month in Bloomberg’s latest economic survey. Gross domestic product is now forecast to rise 2.1 percent this year, up 0.1 percentage point compared with August. That’s the eighth positive reassessment in the past year.

The European Central Bank also raised its forecasts this month, to 2.2 percent. ECB President Mario Draghi said at the time that the expansion “continues to be solid and broad-based across countries and sectors.”

Against that backdrop, policy makers have begun a debate on how to slow the monthly asset purchases they’ve used to help support the economy in recent years.

[“Source-bloomberg”]