Business activity lifted in February as central banks loosen up

Wed Mar 4, 2015 6:27am EST
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By Jonathan Cable

LONDON (Reuters) - Global business activity picked up last month just as many central banks around the world loosen monetary policy further to try and drive up stubbornly low inflation and revive moribund economies.

Growth in China's service industry accelerated and India's expanded at an eight-month high while firms across the euro zone ramped up operations at the fastest rate in seven months, according to surveys published on Wednesday.

The survey results come days after the People's Bank of China (PBOC) cut interest rates and mere hours after the Reserve Bank of India followed suit. The European Central Bank is about to embark on a trillion-euro stimulus program.

"Activity has begun to pick up a bit, some of the concerns about growth falling off a cliff towards the end of last year always seemed to us to be overdone," said Andrew Kenningham at Capital Economics.

"The most likely factor is the fall in the oil price which is now beginning to feed through. Central bank action won't do any harm."

Oil prices, like the euro, have tumbled in recent months, helping drive Markit's final February Composite Purchasing Managers' Index (PMI) for the euro zone, seen as a good growth gauge, up to a seven-month high of 53.3.

Although weaker than a preliminary estimate of 53.5 it comfortably beat January's 52.6 and achieved its 20th month above the 50 level that separates growth from contraction.

Markit said the surveys pointed to first quarter GDP growth of 0.3 percent, the same as in late 2014, with business activity expanding in all the bloc's four biggest economies for the first time since April.   Continued...

A Chinese national flag flutters in front of the headquarters of the People's Bank of China, China's central bank, in central Beijing, May 16, 2014. REUTERS/Petar Kujundzic