Alessandro Speciale Frankfurt
EURO-area manufacturers raised prices for the first time in eight months, adding to signs that the region’s economy is overcoming deflation fears.
Average selling prices rose last month, reflecting increases in Germany, Italy and Ireland London-based Markit Economics said yesterday.
Input costs advanced for a second month, following six consecutive contractions. A Purchasing Managers index for the industry slipped to 52 from 52.2 in March, compared with an April 23 estimate of 51.9. A print above 50 signals expansion.
The report comes after a four-month slump in consumer prices halted last month, supporting European Central Bank president Mario Draghi’s case that his e1.1 trillion (R14.7 trillion) quantitative easing programme is beginning to show success.
Increased economic momentum from Germany to Spain is also supporting the labour market, with unemployment on a slow downward path.
“Price indices have turned higher and manufacturers are taking on staff at the fastest rate since mid-2011,” said Chris Williamson, the chief economist at Markit. “Policymakers should therefore be quietly confident that the region remains on a steady recovery trend.”
In the first quarter, the euro area probably recorded faster growth than the US or the UK for the first time in four years.
Economists in Bloomberg’s Monthly Survey predict that the region’s economy expanded 0.4 percent in the January-March period, compared with 0.1 percent recorded in the US and 0.3 percent in Britain.
Spain is leading Europe’s recovery, and the Bundesbank has expressed confidence that the German economy will continue to grow at a “quite robust” pace. Concerns remain, however, with unemployment in Italy back to near-record levels in March, sluggish factory output in France and Greece on the brink of default.
“Warning lights are flashing particularly brightly over France and Greece,” said Williamson. – Bloomberg