# Euro zone recovery gathers pace, allays fears of recession-PMI
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-03
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Euro zone business activity accelerates, avoiding recession
Meta Description: Euro zone business activity surged in February, boosting hopes of avoiding recession as demand picks up and business confidence increases.
URL: https://financedigest.com/euro-zone-recovery-gathers-pace-allays-fears-of-recession-pmihtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-03-03t090410z1lynxmpej220a3rtroptp4eurozone-economy-pmi-1736814386162-compressed.jpg)

LONDON (Reuters) – The recovery in euro zone business activity gathered pace last month as growth accelerated in the bloc’s dominant services industry, a survey showed, providing the latest piece of evidence suggesting the currency union will avoid a recession.

S&P Global’s Composite Purchasing Managers’ Index (PMI), seen as a good barometer of overall economic health, climbed to an eight-month high of 52.0 last month from 50.3 in January, a little shy of a 52.3 preliminary reading.

February marked its second straight month above the 50 mark separating growth from contraction.

A resounding expansion of business activity in February helps allay worries of a [euro zone](https://www.financedigest.com/euro-zone-consumers-more-optimistic-on-inflation-ecb-survey-shows.html "Euro zone consumers more optimistic on inflation, ECB survey shows") recession, for now,” said Chris Williamson, chief business economist at S&P Global.

There are clear [signs that business](https://www.financedigest.com/4-signs-you-have-what-it-takes-to-run-a-business.html "4 Signs You Have What It Takes to Run a Business") confidence has picked up from the lows seen late last year, buoyed by fewer energy market concerns, as well as signs that inflation has peaked and recession risks have eased.

The future output index, a gauge of optimism about the [year ahead](https://www.financedigest.com/three-waves-of-fintech-disruption-leading-trends-for-the-year-ahead.html "Three waves of Fintech disruption: Leading trends for the year ahead"), rose to 61.2 in February from 60.4, its highest reading in a year.

A PMI covering the [services industry](https://www.financedigest.com/how-the-financial-services-industry-can-solve-the-issue-of-vulnerable-code.html "How the financial services industry can solve the issue of vulnerable code") jumped to 52.7 from 50.8, just below the 53.0 flash reading.

Demand picked up and firms were able to build up a backlog of work for the first [time since](https://www.financedigest.com/soccer-arsenal-reach-womens-champions-league-semis-for-first-time-since-2013.html "Soccer-Arsenal reach Women’s Champions League semis for first time since 2013") October. The new business index bounced to 52.2 from 50.1.

With demand strong business across the region [raised prices](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength") again, albeit at the slowest pace in over a year.

There is a concern, however, that signs of persistent elevated [selling price](https://www.financedigest.com/3-tricks-to-get-a-better-price-when-selling-your-car.html "3 Tricks To Get a Better Price When Selling Your Car") inflation, combined with the surprising resiliency of the economy, will embolden the ECB into more aggressive monetary policy tightening, which poses a downside risk to demand growth in the months ahead,” Williamson said.

Another 50 basis point increase to the [European Central Bank’s](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") deposit rate this month is a done deal, according to economists polled by Reuters, who expected an additional 25 basis point lift next quarter to give a terminal rate of 3.25%.

(Reporting by Jonathan Cable; Editing by Toby Chopra)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---