Buoyant French economy ahead of election a boon to eurozone

  • In World
  • 2017-04-21 08:48:07Z
  • By Associated Press

LONDON (AP) - A buoyant French economy ahead of the presidential election has helped push economic growth across the 19-country eurozone to a six-year high during April, a survey showed Friday.

In a further signal that the region's economy has gathered pace at the start of the second quarter, financial information company IHS Markit said its purchasing managers index - a broad gauge of business activity - rose to 56.7 points in April from 56.4 the previous month. That's the highest level since April 2011.

Anything above 50 indicates expansion, with the latest reading pointing to quarterly economic growth of 0.7 percent, which would be above the region's long-run average.

"Such strong growth, if sustained, will inevitably lead to upward revisions to economists' 2017 forecasts," said Chris Williamson, the firm's chief business economist.

He said the "robust" growth is being seen in both manufacturing and services, with the former "clearly benefiting" from the weak euro, which has also lifted exports to six-year highs. A rise in employment that has accompanied the economic expansion is also shoring up the recovery by encouraging consumers to spend.

On a country basis, the firm noted that France, the eurozone's second-largest economy, is doing particularly well, even outperforming Germany's, the region's biggest.

"France's elections pose the highest near-term risk to the outlook, but in the lead-up to the vote the business mood has clearly been buoyant," Williamson said.

On Sunday, French voters go to the polls to see who will contest the second round of the presidential election on May 7. Opinion polls show a tight race, with centrist Emmanuel Macron and far-right leader Marine Le Pen widely expected to emerge as the front two. However, Thursday's deadly shooting of a policeman in central Paris may influence voting intentions.

Even excluding heavyweights France and Germany, IHS Markit found the eurozone's pace of economic expansion accelerating to a near ten-year high, cementing the increasingly broad-based nature of the upturn.

That broad expansion, coupled with rising inflation pressures, has stoked expectations that the European Central Bank will soon start to at the very least consider easing up on its stimulus efforts.


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