Employment across the Eurozone in February grew at its highest rate since July 2001.

This was among the good tidings reported in the latest Royal Bank of Scotland/NTC Report on the Eurozone - covering the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation Euro currency area.

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.

Among the report's key finding are :

  • Output
    The Index rose from 56.6 in January to 57.7. Output growth has now accelerated for six straight months, growing in February at the highest pace since September 2000. Service sector output showed the greatest rise since September 2000 while manufacturers saw the largest gain since July 2004.

  • New Business
    This continued to rise from the low recorded last May, hitting a 27-month high in February. Manufacturing saw a slightly steeper rate of increase than services, although in both cases the rates of growth improved on those seen in January.

  • Uncompleted Work
    Backlogs of uncompleted work rose for the sixth straight month, with the rate of growth reaching a new survey record high (the backlogs series began in November 2002). Manufacturers reported the largest rise in backlogs since May 2004, while the rate of increase in the service sector remained close to January's five-year peak.

  • Employment
    This rose for the sixth straight month, with the rate of job creation inching up to the strongest since July 2001. Improved employment growth in the service sector was offset, however, by a further modest decline in manufacturing workforce numbers.

  • Average input costs
    These rose to a 13-month peak in February, driven up by higher input cost inflation in manufacturing. Input costs in the service sector rose at the slowest rate for three months.

  • Prices
    Average prices charged for goods and services showed the strongest increase for a year, rising for the sixth month running. The rise reflected a combination of improved pricing power as well as the continued need to pass higher costs on to customers in order to protect profit margins.
The indices are currently based on data from panels in Germany, Italy, France, Spain and Ireland. Combined, these countries account for an estimated 83% of Eurozone private sector services output. Thus, although coverage is incomplete, the proportion of total activity covered by the survey means that the data should be regarded as a good indicator of overall economic conditions.

The service sector survey data cover around 2,000 companies, with the contribution from each company weighted according to company size to produce individual country indices. The data for each country are then combined using weights determined by national contribution of services output to total Eurozone services output.

Data sourced from NTC Research; additional content by WARC staff