Economic activity in the Eurozone picked up in February. According to market researcher S&P Global, this is the strongest pace in nine months. ‘These are good figures, but a lot of misery may still come our way.’
The S&P Global index, which measures overall activity in the euro area, rose to 52.3 from 50.3 the previous month. A level of 50 or higher indicates growth. The figure was better than economists had expected.
S&P Global chief economist Chris Williamson said the growth was driven by “a surge in confidence as recession fears ease and there are signs that inflation has peaked, while industry has benefited of a marked improvement in the offer”. He says prices are still at a high level, partly due to rising labor costs.
Good grades
‘In the winter we still expected the economy to go into recession. That certainly seems to be the case, says Bert Colijn, an economist at ING. ‘These are good figures, but a lot of misery may still come our way.’ According to the report, the economy grew slightly faster in February than in January. A recession therefore appears to be over for now, Colijn says.
According to Colijn, falling energy prices are the main relief. “The energy crisis is not that bad compared to where we were a few months ago.” The fact that these prices are falling is due to the warm winter and well filled gas reserves.
“We’re seeing a little recovery.”
Sentiment is also much better in the services sector, which includes, for example, tourism, catering and retail. With inflation easing and consumer confidence recovering, more is being spent on the hospitality sector and on travel and recreation. “Consumers have become a little less careful,” says Colijn.
An additional factor are the improvements in the supply chain. Problems in the supply chain are rapidly decreasing and this ensures that a lot is being produced. ‘Orders that have been left behind of late are now rolling off the production line very quickly. We are seeing some recovery.”
Ensure
However, there is also a worrying aspect to good economic data. The economy is doing better than expected, while the European Central Bank wants to slow down the economy by raising interest rates to fight inflation. “That’s obviously the concern you can have with this,” says Colijn. This means that the ECB will be “very attentive” to developments. “Based on these figures, interest rates will be increased further.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
