The euro zone's manufacturing sector grew in April for the first time in 13 months, and strengthening global demand has given a sudden boost to raw material prices, a survey said today.
The Reuters eurozone purchasing managers' index rose to 50.7, in line with the consensus forecast, after reaching the 50 level that divides contraction from growth in March. It had slipped into contraction a year ago with the global downturn.
The survey of 2,500 companies revealed companies boosted output and got more new orders for the third month running.
But managers found themselves paying more for raw materials after months of commodity price deflation that has helped to justify low official interest rates.
Higher input prices largely reflected rising oil prices, although a general firming of commodity prices was reported due to strengthening global demand. Companies also highlighted rising steel and nickel prices.
Economists believe returning price pressures and growing evidence of economic recovery will prompt global interest rate rises later this year, although the European Central Bank is expected to leave its key interest rate unchanged at 3.25 per cent when it meets today.