eurozone_pmis

This all begs the question: why? Why did the PMI’s rise so strongly? Chris Williamson, Chief Business Economist at IHS Markit said: “Much of the upturn in demand and the rise in price pressures is attributable to the depreciation of the euro, which companies often cited as making exports more competitively priced but also hiking import prices, exacerbating rising global prices for commodities such as oil.”

But what about the prospects for 2017? Mr Williamson was less upbeat, saying: “While the strong end to 2016 is encouraging news, the manufacturing revival clearly remains vulnerable to political risk. In particular, elections in the Netherlands, France and Germany represent potential key flashpoints which could lead to a marked intensification of political uncertainty in the region in 2017. Hence our expectation that Eurozone economic growth will slow slightly in 2017, down from 1.7 per cent in 2016 to 1.4 per cent.”