What's going on?

Business activity in the eurozone hit its highest level in six years earlier this month, according to an influential survey released on Friday.

What does this mean?

It appears that the eurozone�s economic recovery, which has been picking up for the past six months or so, continues to accelerate. The data suggests that the first quarter could be the eurozone�s best for economic growth in six years and, given that activity accelerated in March, it�s reasonable to expect that this momentum will continue into the second quarter.


Strengthening demand within European countries (e.g. consumer spending), especially in France and Germany, is one main reason for the increased activity. Particularly good news for Europeans is that job growth has improved to the fastest level in almost a decade (according to the survey).

Why should I care?

For the markets: European stocks are getting quite popular.

In another sign of how quickly good news gets �priced into� markets, eurozone stocks have now performed better than US stocks since the start of this year (in US dollar terms), as investors integrate the improving economic data into stock prices. With US stocks looking relatively expensive compared to their eurozone counterparts (e.g. measures such as stock prices versus companies� profits are more elevated in the US), there has been an increasing clamor from research analysts for global investors to focus more on eurozone stocks.


The bigger picture: Perhaps central banks did a good job.

Around this time last year, the financial world appeared quite concerned that central banks, especially in Europe and Japan, had run out of ammunition to boost their lagging economies. While the global pickup in economic growth is almost certainly not entirely due to the actions of central banks, a stronger argument is emerging that, at least, some of their extreme policies have been helpful at reinvigorating their respective economies.