Europe’s Private Sector Grows In January Despite Threat of Deflation

An expected acceleration in euro zone business activity failed to materialize this month and firms cut prices again to drum up trade, which may further stoke fears of deflation in the currency bloc, surveys showed.

Still, the 18-member currency bloc’s recovery appears fairly broad-based, with growth across private industry near 2-1/2 year highs.

“The big picture is one of a region that is recovering. It is not a spectacular recovery, but it is certainly moving in the right direction with a couple of exceptions – notably France,” said Chris Williamson, Markit’s chief economist.

“The periphery has pulled out of its recession and Germany is positively surging.”

Markit’s Composite Purchasing Managers’ Index, which is based on surveys of thousands of companies and is seen as a good guide to growth, dipped to 52.7, just below January’s 31-month high of 52.9.

That missed expectations in a Reuters poll for a rise to 53.1 but marked the eighth month the index has been above the 50 level that divides growth from contraction.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza