HENLEY-ON-THAMES, UK: The eight largest European economies within the twelve nation euro currency area (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) enjoyed a rousing start to 2007, according to the latest monthly Report on Eurozone produced for the Royal Bank of Scotland by NTC Research.

The Composite Output Index recorded 57.5 in January, replicating that of December and indicating a similar buoyant rate of increase throughout the second half of last year. It also signalled an increase in output for the forty-second month in succession

Based on the Purchasing Managers' Index, which in turn collates data from over 6,000 manufacturing and services companies within the Eurozone - plus the UK, Poland and the Czech Republic - the indices provide the earliest indication of business conditions in the zone.

The key findings for January 2007 are . . .

  • New Business
    Growth of incoming new business held steady at the same robust pace recorded in December, running at a rate only slightly below the average seen throughout last year. Faster growth of new business in the service sector countered weaker growth of new orders in manufacturing.

  • Backlogs of Work
    These rose for the seventeenth month in a row, as growth of new business continued to run ahead of current capacity. However, the increase was the weakest recorded for 15 months, reflecting markedly slower growth in the manufacturing sector and subdued growth for the second month running in services.

  • Employment
    Slower growth of backlogs in part reflected recent efforts to boost employment, the rate of growth of which rose to a seven-month high and the second-strongest pace seen in the past six years. Employment has now risen for 17 consecutive months. Staffing levels rose at increased rates in both manufacturing and services, with the latter continuing to report the faster rate of growth.

  • Input price inflation
    This rose to a five-month high, driven up by rising cost pressures in both manufacturing and services. Higher energy and other raw material costs were widely reported, often linked to suppliers gaining pricing power as demand remained strong.

  • Selling Prices
    Prices increased at a survey record rate in January. In both the manufacturing and services industries there was a marked increase on the December reading.
Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. For further information on the Eurozone reports click here.

Data sourced from NTC Research (UK); additional content by WARC staff