Eurozone Growth Hits Six-Year High in June

06 July 2006

Growth in the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area increased again in June.

It is the tenth consecutive month of expansion within the zone and the fastest rate of growth for six years, according to the Royal Bank of Scotland/NTC Eurozone Composite Output Index published Wednesday.

The Index, which signalled an acceleration in growth of combined manufacturing and service sector output, rose from 59.0 in May to 60.4, its highest level since July 2000.

Here are the key findings for June 2006:

  • Output
    Output was boosted in response to increased growth in demand for goods and services. Having eased marginally in May, the rate of growth of incoming new business rose to the fastest since June 2000, buoyed by continuing expansion in both services and manufacturing sectors.

  • New business
    New business has now increased continually over the last thirty-five months, with rising domestic demand helping to support export gains.

  • Backlogs of work
    The Backlogs of Work Index pointed to increased capacity constraints, signalling the largest monthly build-up of uncompleted work since this index began in November 2002. Backlogs have now risen for ten successive months, with the rate of increase gradually picking up over this period.

  • Employment levels
    Manufacturers saw a sharper rise than service providers for the fifth month in a row. Firms took on more staff to raise capacity and meet higher inflows of new business, triggering the highest monthly increase in employment since November 2000. Employment has now risen for ten straight months.

  • Average prices
    Average prices charged for goods and services rose for the tenth consecutive month, with the rate of inflation rising for the sixth month in a row to its steepest level since charges were first monitored by the survey in November 2002.

  • Price inflation
    Average input prices continued to rise at a strong rate in June, principally as a result of higher energy and metals prices, as well as some signs of increased wage pressures. However, the rate of inflation eased slightly from May's 19-month peak.
For further information on the Eurozone indices click here.

Data sourced from NTC Economics; additional content by WARC staff