EURO ZONE services business grew at its fastest pace in 20 months in October, quicker than expected, while manufacturing activity expanded for the first time in over a year, suggesting recovery is gathering pace.

Markit’s Eurozone Flash Services Purchasing Managers Index (PMI), compiled from surveys of about 2,000 companies, leapt to 52.3 in October from 50.9 in September, its highest level since February 2008.

That beat consensus expectations for a rise to 51.4, powered ahead by a leap in services growth in France. The reading for the dominant service sector, above the 50.0 mark that divides growth from contraction for the second consecutive month, will likely reassure the European Central Bank (ECB) that its loose monetary policies are bearing fruit.

The euro zone economy contracted 0.1 per cent in the second quarter of this year, having shrunk by a record 2.5 per cent in the first quarter.

The euro zone flash manufacturing index also beat expectations for 50.1 by coming in at 50.7, an 18-month high. The sector’s output index rose to a 23-month high of 54.1, well above September’s 51.7.

Separate Eurostat data released yesterday indicate new industrial orders in the euro zone rose 2 per cent from July to August and were up by 1.2 per cent in the EU27.

However, Ireland recorded the biggest fall in manufacturing orders across the EU, according to new figures. The highest increases in total manufacturing orders occurred in Slovakia, the Czech Republic and France.

Ireland experienced a fall of 14.6 per cent, with Poland down 10.6 per cent. Over the year to the end of August, industrial new orders fell by 23.1 per cent in the euro zone and by 22.3 per cent in the EU as a whole. – (Reuters)