Euro-zone economic growth picked up

The euro zone's economy grew more rapidly than first estimated in February, expanding at the fastest pace since mid-2011.

Data firm Markit Wednesday said its composite Purchasing Managers Index for the euro zone--a measure of activity in the manufacturing and services sectors--rose to 53.3 in February from 52.9 in January. That was above the preliminary estimate of 52.7 released last month, and the highest since June 2011. A reading above 50.0 for the purchasing managers index indicates an expansion in activity.

That will provide some encouragement to members of the European Central Bank's governing council as they prepare to meet on Thursday, although it continues to indicate that the economic recovery that began in the second quarter of last year remains modest.

The surveys also suggest that businesses have begun to add jobs, and that an improvement in the labor market may be on the way.

"Although only marginal, the increase in headcounts was nevertheless the first improvement seen since 2011 and suggests that companies are gaining confidence about the sustainability of the upturn," said Chris Williamson, Markit's chief economist.

But policy makers will be concerned by evidence from the surveys that showed firms cut their prices for the 23rd month running. Figures released Friday showed the annual rate of inflation in the euro zone was unchanged at 0.8% in February, well below the ECB's target of just under 2.0%.

The ECB has come under mounting international pressure to boost growth and ensure the inflation rate rises towards its target over the coming years. Speaking in Bilbao, Spain on Monday, the head of the International Monetary Fund, Christine Lagarde, warned that a prolonged period of low inflation in the euro zone may derail the currency area's fragile economic recovery, and said that the threat must be countered with additional monetary stimulus.

Figures released by European Union's statistics agency on Tuesday showed prices of goods leaving the euro zone's factory gates fell at the fastest annual rate since the end of 2009 in January, an indication that inflation is unlikely to pick up significantly in coming months.

Write to Paul Hannon at paul.hannon@wsj.com 

News Source: www.marketwatch.com