Investing.com - Economic activity in the euro zone unexpectedly rose in November, registering its strongest growth this year, as both the manufacturing and service sector advanced more than forecast, preliminary data showed on Wednesday.
In a report, market research group Markit said that its flash Euro Zone Composite Output Index, which measures the combined output of both the manufacturing and service sectors increased to 54.1 November, from the prior month’s reading of 53.3 and above forecasts for no change.
The flash services purchasing managers’ index rose to 54.1 this month, from October’s final reading of 52.8, beating expectations for a reading of 53.0.
The preliminary euro zone manufacturing purchasing managers’ index unexpectedly rose to a seasonally adjusted 53.7 this month from a final reading of 53.5 in October. That was a 34-month high.
Analysts had expected the index to dip to 53.3 in November.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The report indicated that new order inflows showed the largest monthly improvement since last December, with the rate of growth accelerating for the third month running.
The influx of new work helped cause backlogs of uncompleted orders to rise at the fastest rate since May 2011, Markit said.
“With firms’ outstanding order book volumes Markit Eurozone PMI and GDP accumulating to the greatest extent in five-and-a-half years, companies took on more staff to help raise operating capacity,” the research firm noted.
Employment growth strengthened for the second month running to reach the joint-highest pace since February 2008, according to the release.
Meanwhile, average prices charged by companies for their goods and services rose for the first time since August of last year, led by price rises in the manufacturing sector.
“Furthermore, although only marginal, the price increase was all the more notable for being the largest since August 2011,” Markit added.
Markit chief economist Chris Williamson noted that the report provided “plenty of signs that growth will continue to accelerate” and said the data suggested fourth quarter GDP growth for the region of 0.4%, led by a 0.5% expansion in Germany.
“ECB policymakers will also be pleased to see inflationary pressures are intensifying steadily,” Williamson said.
“However, with indicators such as rising backlogs of work and longer supplier delivery times suggesting demand is exceeding supply, price pressures look set to intensify further in coming months,” he added.
Following the report, EUR/USD was at 1.0603 from around 1.0608 ahead of the release of the data, while EUR/GBP was at 0.8566 from 0.8563 earlier.
Meanwhile, European stock markets were trading mixed. The Euro Stoxx 50 edged forward 0.07%, Germany's DAX dropped 0.03%, France’s CAC 40 inched up 0.08%, while London’s FTSE 100 gained 0.68%.