The Eurozone Zoomed Ahead

The Eurozone Zoomed Ahead

9 months ago2 mins

Data out on Tuesday showed that eurozone business activity sped forward this month.

What does this mean?

Turns out the beleaguered eurozone – which borders war-torn Ukraine and was recently smacked by an energy crisis – is actually doing pretty well for itself. At any rate, that’s what was found by a monthly survey asking purchasing managers how business has been. By their account, business activity has grown at the greatest rate in nine months, whizzing past economists’ expectations to post the second-straight month of growth. That bumper performance was solely down to the services sector, which clocked up its best performance since June and offset a slight slowdown in manufacturing as factory activity dropped off.

Eurozone PMI

Why should I care?

For markets: Growing, growing, gone.

This data has got economists thinking the economy might grow this quarter, and it’s no surprise they’re looking on the bright side: natural gas shortages don’t look likely right now, inflation’s currently on the ebb, and consumer confidence is at its highest in a year. But that good news could have some not-so-good effects, keeping the flames of inflation hotter for longer and prompting more hikes from the European Central Bank. That chimes with what Goldman’s thinking: the firm revised its predictions earlier this week, betting that interest rates will peak at around 3.5% in June – not 3.25%.

Zooming out: Pricey permits.

The improving economic outlook meant that the price of European pollution permits rose to over €100 ($107) for the first time ever on Tuesday. That means that the carbon credits – one of the mainstays of the region’s net zero strategy – have risen fivefold in three years. And that’s not really a shocker: tumbling gas prices have spurred industry on, and the specter of more stringent climate regulations has got businesses stockpiling permits, further buoying up prices.

Europe carbon price


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