Global economy growing at fastest pace in a year: Survey

Global private sector activity grew at its fastest pace in a year last month as a strong improvement in the United States offset a drag from the euro zone, survey data showed on Tuesday.

The Global Total Output index, produced by JPMorgan with the input of research and supply management organisations, was 55.5 in February, up from 54.5 in January, comfortably above the 50-mark that divides growth from contraction.

“The world economy is gaining strength. The global PMI hit a one-year high in February, building on the gains of previous months, with momentum improving at both service providers and manufacturers,” said David Hensley at JPMorgan.

The Global Services index bounced to 56.5 last month from January’s 55.3, its highest reading since last February.

But that growth has come at a cost with prices rising at their fastest pace since May 2011, pushed up by escalating oil prices and an associated increase in transportation costs.

Earlier data showed the pace of growth in the United States services sector unexpectedly picked up in February to its highest level in a year.

But euro zone private sector surveys showed a sharp downturn among activity at Italian and Spanish businesses dragged the currency bloc back into decline last month. Growth slowed in Germany, the region's biggest and strongest economy, and stalled in France.

A collapse in household spending, exports and manufacturing sucked the life out of the euro zone’s economy in the final months of 2011, the EU said on Tuesday, showing the scope of the downturn that looks set to become a fully fledged recession.

Output in the 17 countries sharing the euro shrank 0.3 per cent in October to December from the third quarter, the European Union’s statistics office Eurostat said, confirming an earlier estimate released last month.

In Asia, China's service sector picked up pace, although it was still below its long-term trend, while in India the sector lost momentum, shedding workers.

The index combines survey data from countries including the United States, Japan, Germany, France, Britain, China and Russia.