(MENAFN– ecpulse) European manufacturing confirmed a widening expansion in January, giving a sign of hope the euro area would continue its gradual recovery.
PMI manufacturing remained unrevised at 54.0 last month from 52.7 in December, better than the initial reading of 53.9, where the final reading for services is due later in the week.
The advanced composite of manufacturing and services showed further expansion in January as the PMI gauge soared to 53.2 from 52.1 in December.
In Germany, the manufacturing sector also remained unrevised in January at 56.5 versus 54.35 a month earlier.
ECB President Mario Draghi has echoed that the 18-nation region would continue a gradual recovery this year.
ECB policymaker Ewald Nowotny said the bank could revise up its growth forecast for the euro area in March after raising it slightly in December to 1.1 percent expansion.
"We do see encouraging signals and the first signs of an economic recovery in the euro area, but it is still weak and uneven," Draghi has mentioned.
Yet, he warned “the risk of setbacks is large. I would be very careful not to give an overly optimistic outlook."
“The lower the inflation rate, and … the larger the deflation rate, the more dangerous it is for the euro recovery,” IMF chief economist Olivier Blanchard has warned.
The euro area is still facing some challenges to lurch toward recovery, most notably the high unemployment and some risks of deflation.
CPI inflation retreated to a four-year low of 0.7 percent in January from 0.8 percent in December, where the ECB has mentioned the euro area economy may experience a prolonged period of low inflation.
Later in the week, the ECB will announce its second monetary decision this year after preferring to hold their monetary stance last month amid signs of improvement in the economy.
It seems that cutting interest rate further would not add much and a move such as buying packages of bank loans and companies may be one of the good tools.
As of 09:02, the euro traded higher versus the U.S. dollar around 1.3495 after hitting a low of 1.3475.
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