Eurozone Service Activity Boom
Markit report has shown that there has been an increase in the business activity of service firms in the Eurozone within the month of February. This means that Eurozone services has constantly been on an increase for seven months now – indicating a serious boom for the service companies through out the Eurozone.
The report indicated that the composite services purchasing managers’ index (PMI) for February is 53.5, increasing from the value in January which was 52.6.
One can deduce from the data that there is a boost in business activity in the Eurozone, because it has maintained a PMI above 50 for several months instead of going below 50 which would mean a decline. As a result of this boom, firms have been hiring more than before for quit a while now – meaning employment increase.
The reverse is the case for manufacturing activity in the Eurozone, the purchasing managers’ index for manufacturing this February fell below 50 for the euro zone. Its value decreased from 49.2 in January to 47.7 in February.
Eurozone depend more on services than manufacturing, making servicing companies the core of their economy. More so, the fall in oil price has boosted the services sector since they rely greatly on products like gas in other to run their business activities – a fall in the price of oil means reduced cost of gas. So input has been reduced while output has increased for the service providers in the Eurozone.
Contrary to the fear harboured by many, the Greece indebtedness saga did not really hinder the economic growth of other European countries in the Eurozone. In spite of the crisis, there is a boom in business activity this February. Markit’s Chief Economist, Chris Williamson statement supports this – “Undeterred by the on-going Greek debt crisis, economic growth is gathering momentum and looks set to gain further traction in coming months,” So, the business service sector in the Eurozone is experiencing an all time high.