Europe's economic renaissance shows no signs of slowing down

The eurozone economy continued to grow at a strong pace in April, according to the latest composite PMI survey from IHS Markit released on Friday morning.

Markit’s composite figure for the eurozone — a reasonable measure of growth in the continent-wide economy — came in at 56.7 in April

That was substantially ahead of March’s final reading of 56.4 and reflected the highest score for more than six years. It was also well ahead of the 56.3 forecast by economists polled in the run up to the release.

“Job creation also rose to the highest for almost a decade as firms boosted operating capacity in line with buoyant demand and widespread optimism about future prospects,” an IHS Markit statement said.

The purchasing managers index (PMI) figures from Markit are given as a number between 0 and 100. Anything above 50 signals growth, while anything below means a contraction in activity — so the higher the better.

Here is the full scoreboard of PMIs:

  • Services PMI — 56.2 (March reading of 56)
  • Manufacturing PMI — 58 (March reading of 57.5)
  • Composite PMI — 56.7 (March reading of 56.4)

And here is the chart showing the long-term trend:

As is often the case, the month’s strong data was driven by a positive April for both Germany and France, the eurozone’s two biggest economies, but Spain and Italy also helped contribute.

“By country, faster business activity growth in France — the strongest seen since May 2011 — was offset by a moderation in Germany, albeit with the pace of German expansion still running at one of the fastest seen over the past six years,” a release added.

Businesses largely overlooked the uncertainty of the upcoming French election, with IHS Markit’s Chief Business Economist Chris Williamson saying in a statement: “France’s elections pose the highest near-term risk to the outlook, but in the lead-up to the vote the business mood has clearly been buoyant.”

Williamson continued:

“The eurozone economy has enjoyed a strong start to the second quarter. The April flash PMI is running at a level consistent with 0.7% GDP growth, up from 0.6% in the first quarter. Such strong growth, if sustained, will inevitably lead to upward revisions to economists’ 2017 forecasts.”

“Robust rates of expansion are being seen in both manufacturing and services, the former clearly benefitting from the weak euro, which has helped drive export sales growth to a six-year high.”

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