The FINANCIAL — Business activity in the 19 nations that use the euro picked up in February, according to preliminary surveys published on February 20, a sign that the region’s economy is gently improving as policy makers grapple with the twin threats of falling prices and renewed uncertainty over Greece’s future in the eurozone.
Data firm Markit said its composite purchasing managers index for the currency bloc–a gauge of private-sector activity–rose to 53.5 in February from 52.6 a month earlier, its highest reading for seven months. A reading above 50 indicates business activity is expanding.
“Economic growth is gathering momentum and looks set to gain further traction in coming months,” said Chris Williamson, Markit Chief Economist.
Prices charged by companies in the manufacturing and services sector continued to fall, though, underscoring the challenge facing the European Central Bank in its efforts to lift annual inflation in the eurozone back toward its target of just under 2%. Consumer prices declined 0.6% on the year in January, according to a preliminary estimate. The ECB announced last month that it intends to purchase EUR60 billion ($68 billion) of government bonds and other assets a month to fuel growth and stoke inflation, according to Nasdaq.
Eurozone finance ministers meet in Brussels on Friday for a fresh attempt to end an impasse between Greece’s new left- wing government and its eurozone creditors over the terms of the country’s bailout program. Athens is eager to relax austerity measures imposed on Greece as a condition for hundreds of billions of euros in aid. Creditors led by Germany are adamant that Greece must press ahead with much-needed reforms to revive its crippled economy.
On February 19, Germany dismissed a Greek request for an extension to its EUR240 billion bailout program, which expires in a little over a week. Without a new deal, the government in Athens would be left without funds and Greek banks could lose access to critical ECB financing, losses that would call into question the country’s future as a member of the euro area.
Although Germany rejected Athens’s request, senior eurozone officials saw it as a sign that the Greek government’s previous hard line may be softening, according to Nasdaq.
European Commission President Jean-Claude Juncker viewed it as “a positive sign, which in his assessment could pave the way for a reasonable compromise in the interest of stability in the euro area as a whole,” Margaritis Schinas, Mr. Juncker’s spokesman, said on February 19.
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