The 19-country eurozone economy closed out 2017 growing stronger than at any time in nearly seven years and optimism about the year ahead remaining buoyant, according to a closely watched survey Thursday.
Financial information company IHS Markit said that its purchasing managers index - a broad gauge of business activity across manufacturing and services - spiked to 58.1 points in December from the previous month's 57.5. Any reading above 50 indicates growth and December's level was the highest since February 2011, pointing to impressive quarterly economic growth of 0.8 percent.
"A stellar end to 2017 for the eurozone rounded off the best year for over a decade, continuing to confound widely-held fears that rising political uncertainty would curb economic growth," said Chris Williamson, the firm's chief business economist.
What's particularly encouraging for the eurozone, which has spent much of the past decade in crisis mode, is that the growth is broad-based across countries and not just isolated to powerhouse Germany. With previous laggards such as Ireland and Italy showing momentum, there's renewed belief that the currency bloc has got past its debt crisis and is in a growth cycle that will cut into unemployment. Hiring is running at a 17-year high rate, according to IHS Markit.
While the economic backdrop has transformed over the past few months, it has not boosted wages much and that's prevented inflation in the eurozone from rising towards the European Central Bank's target of just below 2 percent. One big question for the year ahead is whether the growth works through the wider economy to push wages - and inflation - higher. Figures due Friday are set to show inflation in the eurozone stubbornly below target at an annual rate of 1.4 percent.
