ECB Action has Euro Economy Showing Unexpected Strength

Euro-area manufacturing and services activity strengthened in a sign of confidence that further stimulus by the European Central Bank will consolidate a fledgling economic recovery.

A Purchasing Managers Index for both industries jumped to 54 in July from 52.8 in June, matching a three-year high reached in April, London-based Markit Economics said today. That’s the 13th month the gauge has exceeded 50, the mark that signals expansion. Economists predicted an unchanged reading of 52.8, according to the median of 22 estimates in a Bloomberg News survey.

The pickup comes after policy makers introduced a negative deposit rate and targeted loans to bolster lending, growth and an inflation rate running at a quarter of the ECB’s goal. While risks to the economic outlook have increased with escalating tensions in the Middle East and Ukraine, strengthening manufacturing in China bodes well for export demand.

Bloomberg

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