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Bloomberg News Manufacturing in the dozen nations sharing the euro expanded in February at the fastest pace in 19 months, bolstering the European Central Bank's case for higher interest rates. Bonds fell and stocks rose.An index based on a survey of about 3,000 purchasing managers rose to 54.5, the highest since July 2004, from 53.5 in January, said NTC Research Ltd., which compiles the gauge for Royal Bank of Scotland Group Plc. The euro region's economy is gaining momentum as export-led growth starts to fuel domestic spending, giving the ECB room to raise the benchmark interest rate from 2.25 percent at its meeting tomorrow. Fiat SpA, Italy's biggest manufacturer, said it aims to more than double profit next year. German unemployment declined last month and French consumers were the most optimistic in almost a year. It was the eighth straight month the PMI index held above 50, which signals expansion. Adding to signs the economy is gathering strength, an index of growth in European service industries probably rose to 57.3 in February from 57, according to a Bloomberg News survey. NTC Research is due to report the figures on March 3. A 9.5 percent drop in the euro against the dollar over the past year has helped bolster optimism by making exports more competitive. The Berlin-based DIHK chamber of industry and trade on Feb. 14 raised its growth forecast for Germany, Europe's largest economy, on increasing exports and investments. In the U.S., the world's largest economy, manufacturing probably accelerated last month to 55.5 from 54.8, according to the median estimate of 60 economists in a Bloomberg News survey. The Institute for Supply Management will release figures at 4 p.m. Paris time. Fiat, Vivendi Fiat will probably pay a dividend next year if it meets its 2006 profit target, Chief Executive Sergio Marchionne said Feb 28. Earnings posted in the fourth quarter ended 17 consecutive quarters of losses at the car unit. Jean-Bernard Levy, chief executive officer of Vivendi Universal SA, today forecast 2006 to show ``further improved growth and improved profitability,'' according to a statement. The Paris-based company is ``already seeing encouraging signs.'' A sub-index measuring companies' new orders increased to 56.7 in February from 55.5 in the previous month, today's report showed. A gauge of manufacturers' output rose to 57 from 56.7 in January and an employment indicator increased to 49.7 from 49.6. ``The data confirm our view of a further acceleration in activity and also confirm the recent improvement in growth is indeed feeding into the labor market,'' said Stephane Deo, London- based chief European economist at UBS AG. ``This should eventually support domestic growth in the future.'' Joblessness in the euro region held at 8.3 percent, the lowest since July 2002, the European Union reported today. While growth is gathering pace in Europe, rising oil costs and stagnant job creation have weighed on consumers. The ECB predicts inflation will stay above 2 percent for a seventh year in 2006. In January, consumer prices rose 2.4 percent from a year earlier after a 2.2 percent increase in the previous month. |
