Eurozone PMIs Point to Higher Inflationary Pressures

The euro area’s accelerating economy is translating into faster job creation and stronger inflation pressures.

A Purchasing Managers’ Index rose to 56.7 in March, the highest level in almost six years, from 56, IHS Markit said on Friday. That compares with economists’ expectation for a decline to 55.8 and is in line with a quarterly gross-domestic-product expansion of 0.6 percent. Employment rose the most since July 2007, with hiring picking up both in services and manufacturing.

A broadening recovery has so far allowed the currency bloc to weather a period fraught with uncertainties ranging from the U.K.’s Brexit vote to the U.S. administration’s trade policies, as well as upcoming elections in euro-area countries. As momentum gathers and a mostly oil-driven spike in inflation firms, the European Central Bank is coming under increasing pressure to plan an exit from its extraordinary stimulus.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.