Eurozone returns to growth.

 Activ­ity has unex­pec­tedly returned to growth for the first time since June, says an S&P Global sur­vey

likely to bol­ster ECB resolve to raise rates. S&P Global’s flash euro­zone com­pos­ite pur­chas­ing man­agers’ index, a meas­ure of activ­ity in man­u­fac­tur­ing and ser­vices, rose to 50.2 in Janu­ary from 49.3 in Decem­ber, fig­ures yes­ter­day showed. «A steady­ing of the euro­zone eco­nomy at the start of the year adds to evid­ence that the region might escape reces­sion,» said Chris Wil­li­am­son, chief busi­ness eco­nom­ist at S&P Global Mar­ket Intel­li­gence. Sup­ply chain stress has eased, and the reopen­ing of the Chinese eco­nomy has helped restore con­fid­ence in the broader global out­look for 2023.

The rise in the com­pos­ite euro­zone PMI index con­trasts with an unex­pec­ted deteri­or­a­tion in the UK, where the cor­res­pond­ing index sig­nalled the sharpest drop in activ­ity in two years. A resi­li­ent euro­zone eco­nomy coupled with high under­ly­ing price pres­sures and renewed momentum in the labour mar­ket rein­forced ECB sig­nals of fur­ther mon­et­ary tight­en­ing. The S&P PMI sur­vey, based on data col­lec­ted between Janu­ary 12 and 20, showed employ­ment growth picked up momentum as busi­nesses pre­pared for a bet­ter than expec­ted year. Busi­ness expect­a­tions have increased the most monthly since June 2020, push­ing con­fid­ence to its highest level since last May.

«Some­times you just need a bit of luck,» said Bert Colijn, senior eco­nom­ist at ING. The euro­zone had avoided «dra­matic scen­arios» for the winter after a mild Decem­ber in which the deple­tion of gas stores was far lower than feared. Activ­ity in the ser­vices sec­tor expan­ded for the first time since last July, and man­u­fac­tur­ing out­put registered the smal­lest fall since last June.

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