Eurozone Growth Highest for Five-and-a-Half Years

06 April 2006

The Eurozone Composite Output Index, published monthly by the Royal Bank of Scotland and NTC Economics rose to 58.5 in March from 57.7 in February. The latest reading - which measures the combined output of the manufacturing and service sectors - indicates the fastest rate of growth since September 2000.

The Composite Indices measure the performance of the zone's combined manufacturing and service sectors, and are based on data from over 6,000 manufacturing and services companies. The questions asked are about real events and are not opinion based.

The Report on the Eurozone covers the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation Euro currency area. Its key findings for March 2006 are . . .

  • Output
    This has now risen for 32 consecutive months, with the rate of increase accelerating continually over the most recent seven months. Output rose at similar strong rates in both manufacturing and services.

  • New Business
    Accelerating growth of incoming new business in both manufacturing and services pushed the index to a five-and-a-half year high.

  • Goods and Services
    The rapid growth of demand for goods and services has strained operating capacity at increasing numbers of companies in recent months. Backlogs of uncompleted work rose for the seventh successive month, with the rate of growth reaching a record survey high.

  • Companies took on more staff to meet rising workloads, and employment rose for the seventh successive month. The rise in headcounts was the largest since March 2001, although the rate of increase remained relatively subdued compared to the rate of output expansion. A marginal increase in manufacturing was accompanied by a more solid rise in the service sector.

  • Employment
    The subdued rate of job creation, especially in manufacturing, was again attributable to the need to keep control of staff costs in the face of sharply rising input prices for energy and other commodities.

  • Input Costs
    Overall growth of average input costs eased slightly from February's 13-month peak, but nevertheless remained marked.

  • Prices
    Average prices charged for goods and services rose for the seventh straight month, showing the strongest increase since charges data were first tracked in November 2002.
The report features original survey data collected from a representative panel of over 5000 companies across the euro area manufacturing and service sectors. For further information on the Composite Indices click here

Data sourced from NTC Research; additional content by WARC staff