[LONDON] Eurozone business activity accelerated in March at its fastest pace for nearly a year as customers took advantage of ongoing price discounting to place new orders at a rate not seen since mid-2011, a survey found.
The upbeat survey will provide welcome news for the European Central Bank just weeks after it embarked on a trillion-euro asset-purchase programme to try and spur growth and inflation.
Markit's final March Composite Purchasing Managers' Index (PMI), seen as a good indicator of growth, stood at 54.0, a touch below the preliminary estimate of 54.1 but well ahead of February's 53.3. A reading above 50 implies growth.
"The PMIs are indicating somewhat sluggish GDP growth of 0.3 per cent for the first quarter. However, the important message from the survey data is that the pace of expansion looks set to gather pace in coming months," said Chris Williamson, Markit's chief economist.
Markit's growth projection is slightly less than the 0.4 per cent predicted in a Reuters poll taken last month.
A sub-index measuring new orders leapt to 54.1 from 52.5, its highest since May 2011. That suggests a healthier outlook although the survey also showed companies have now been cutting prices for three years, although not as sharply in March.
Eurozone consumer prices fell again in March, as expected, but the decline was the smallest this year.
That price-cutting helped drive service industry activity up at its fastest pace in eight months. The March service sector PMI rose to 54.2 from 53.7, just below the flash 54.3 estimate.
With the recovery gathering steam and confidence growing because of the ECB's QE programme, service companies were at their most optimistic since May 2011. The business expectations sub-index came in at 64.8 compared with February's 64.1.
"With the ECB's policy of quantitative easing also set to provide a boost to the nascent recovery in coming months, the economic outlook is therefore brightening as we expect to see more upward revisions to growth forecasts for the year," Mr Williamson said.