Businesses across the eurozone are hiring workers at a rate not seen since before the financial crisis as the burgeoning economic recovery takes hold.
France and Germany – the biggest economies in the currency area – are both growing at the fastest pace in six years, with much of the rest of the area following suit.
The purchasing managers’ index (PMI), a private sector survey from IHS Markit, stood at 56.8 last month, staying at its highest level since 2011.
Any score of above 50 indicates economic growth, so these figures show a rapid expansion appears to be taking place.
That seems to be translating into more jobs for workers in the eurozone. The employment component of the index rose to 54.5, in line with numbers seen in recent months.
The last time hiring was this strong was in 2007.
“The entire eurozone economy could become the positive growth surprise of 2017. With political risks now ebbing away, economics (ie. at least a positive cyclical upswing) have quickly taken over,” said economist Carsten Brzeski at ING.
“This sentiment is also spreading across financial markets, with many market participants now realizing that the eurozone economy had been written off too early.
“However, as much as the pessimism at the start of the year was exaggerated, the current euphoria is as well. Be aware of the sugar rush. Despite the cyclical upswing, structural problems in the eurozone economy have not disappeared.”
At the same time a survey of German businesses by the IFO Institute also hit a new record high.
Companies have a strong assessment of both the current environment and the expected future economic picture.
Officials confirmed that Germany, the eurozone’s biggest economy, grew by 0.6pc in the first quarter of the year, accelerating from 0.4pc in the previous three-month period.
Analysts suggested that Emmanuel Macron’s victory in the French presidential election had helped boost sentiment.
“We had expected a jump due to relief over Macron’s election victory in France. The surge in exports and investment, building on sustained growth in domestic consumption puts the [German] economy in an extremely strong state at the moment,” said economist Christian Schulz at Citi.
“Public and private finances are very solid, the labour market in a very robust state. Wage growth remains moderate but on the current evidence should pick up markedly in coming years, helping the European Central Bank to achieve its inflation target and begin normalising policy.”
However, some risks remain in the currency area.
Eurozone finance ministers failed to reach a deal on Greek debt relief, adding to tension in the peripheral economy.
“Expect the negotiation can to be kicked to June, when all can then agree to extend and pretend that 2019 onwards holds nothing but milk and honey for Greece,” said Michael Every at Rabobank.
source by tele…