Eurozone economy hits near 6-year high

[BRUSSELS] Eurozone business activity hit its highest rate since May 2011 in December but the outlook remains hostage to political developments, a closely watched survey showed on Wednesday.

Data monitoring company IHS Markit said its report suggested the 19-nation eurozone economy was set for solid growth but nothing could be guaranteed as "political uncertainty dominates" - an apparent reference to the election of Donald Trump and continuing turmoil over Brexit.

It said its December Composite Purchasing Managers Index came in at a final 54.4 points, up from November's 53.9 points.

December was initially also given at 53.9 points.

The PMI measures companies' readiness to spend on their business and so gives a good idea of how the underlying economy is performing.

Any reading above the boom-bust 50 points line indicates the economy is expanding.

IHS Markit chief business economist Chris Williamson said the December figures "signal an even stronger end to 2016 than the preliminary flash numbers, though whether this provides a much-needed springboard for the euro area's recovery to gain further momentum in 2017 remains very uncertain." "Much depends on political events over the course of the next year," Mr Williamson said, without specifying what issues he was referring to.

He said the report pointed to economic growth of 0.4 per cent in the last three months of 2016, up from 0.3 per cent in the third and second quarters, supported by a weaker euro and the European Central Bank's unprecedented stimulus programme.

"The concern is that domestic demand is likely to remain subdued over the course of 2017 as political uncertainty dominates, resulting in another year of disappointing growth across the region as a whole," he added.

AFP