Eurozone business growth spikes to three-year high, but ECB’s Lagarde urges caution

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Eurozone business growth spikes to three-year high, but ECB’s Lagarde urges caution

On Friday, a survey from a British-American business research group, IHS Markit, had reported that the 26-member bloc’s business growth had accelerated by the steepest pace in more than three years this month, however, ECB (European Central Bank) President Christine Lagarde had urged caution about tapering fiscal supports citing that an uneven growth across the region alongside an uncertain recovery outlook might still require emergency support from the European Central Bank.

On top of that, although a sharp shoot-up in services sector activity following an acceleration in vaccination drive had reportedly added to further stimulus on a booming manufacturing activity in the euro zone, building up a strong case for ECB to ease off emergency measures, voicing a cautious tone, ECB President Lagarde said following reveal of IHS Markit data, “We are committed to preserving favourable financing conditions.

It's far too early and it's actually unnecessary to debate longer-term issues.

Eurozone business growth hits three-year peak in May

Concomitantly, the London, UK-based British-American business group, IHS Markit said earlier on the day that its index for flash composite eurozone PMI (Purchasing Managers’ Index), a closely observed indicator for the economy’s health, soared to 56.9 in May following a reading of 53.8 registered in April, marking up the highest level since February 2018.

While a reading above 50 indicates growth, a figure below 50 signals a contraction for an economy. Alongside this, the eurozone economy is anticipated to grow by 1.4 per cent combined over the current quarter, but forecasting a dovish monetary policy from the ECB in a near term, a Nomura analyst George Buckley said, “We don't think today's euro area PMI data will cause the ECB to taper the PEPP next month”.