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Euro zone business growth hit fastest this year

Monday, December 05, 2016 - 01:31

Euro zone business activity grew at its quickest pace this year in November and firms raised prices faster than at any time in five years, a survey found. But, as Sonia Legg reports, the European Central Bank is still expected to extend its bond buying programme later this week.

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Newspaper sellers were enjoying brisk business in Rome thanks to political turmoil in Italy. And it seems other firms in the euro zone are doing reasonably well too. Business activity in November grew at its fastest pace this year. Firms also raised prices faster than at any time in five years. The weaker euro helped, according to IHS Markit. It's final composite PMI was 53.9. (SOUNDBITE) (English) RESEARCH DIRECTOR AT CITY INDEX, KATHLEEN BROOKS, SAYING: "The pick up in the economic data - the pick up in the PMI surveys is very positive however that does also give a bigger challenge to the ECB. Better economic data makes it harder for them to extend their bond buying programme and that's what everyone is going to look for this week." Official EU statistics were equally upbeat about euro zone retail sales. Eurostat's figures showed they rose by 1.1 percent in October - largely thanks to an increase in non-food sales. It was the strongest pace in more than two years. And the ECB will be taking note, with a key meeting on Thursday. (SOUNDBITE) (English) RESEARCH DIRECTOR AT CITY INDEX, KATHLEEN BROOKS, SAYING: "This is a very anticipated meeting. We think in one way they will extend the bond buying programme but we don't know by how much. Maybe they will make it smaller which in itself is a form of tapering." The PMI for the dominant service sector also jumped to its highest level this year. And manufacturers enjoyed their best month in November since the start of 2014. It's taken years of ultra-loose monetary policy to get to this stage - the worry now is political risk could derail the recovery.

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Euro zone business growth hit fastest this year

Monday, December 05, 2016 - 01:31