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Homeeurope newsEuro zone business activity hits 2.5-year high

Euro zone business activity hits 2.5-year high

Business activity in the euro zone expanded at its fastest pace since June 2011 in January, driven by the region's burgeoning manufacturing sector.

Markit's composite purchasing manager's index (PMI) for the 18-nation currency zone rose to 52.9 in January, up from 52.1 in December. It was, however, lower than the flash estimate of 53.2 (a reading over 50 marks expansion).

The production line at the Jaguar Land Rover factory in Solihull, EnglandOli Scarff | Getty Images

Separate data, also published Wednesday, revealed that December was a tough month for the retail sector. Sales fell by 1 percent in the month compared to December 2012 – significantly lower than the 1.5 percent rise expected by economists.

(Read more: Deflation fears: Will the ECB pull the trigger again?)

With regards to the PMIs, January marked the seventh consecutive month of growth in the euro zone economy.

The uptick was driven by the manufacturing industry, where accelerating new orders and export business pushed the rate of expansion close to a three-year high.The recovery in the services sector, however, was more subdued in January, with activity rising to 51.6 from 51.0 in December.

Chris Williamson, Markit's chief economist, said the reading signals a "very encouraging start" to 2014.

"The upturn is also feeding through to the labor market: employment has stabilized over the past two months, bringing an end to the continual culling of staffing levels seen since the start of 2012," he said in a release.

(Read more: UK construction at 6-1/2 year high in January)

"Hopefully we will now soon see companies start to generate new jobs in significant enough numbers to bring down the region's unemployment rate in coming months, which will perhaps represent the true start of the economic recovery for many people."


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