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Business Activity Grows In Europe As Inflation Eases

Business activity in Europe is growing again as inflation pressures ease across the continent.

S&P Global's Composite Purchasing Managers' Index (PMI), which is viewed as a good gauge of business activity throughout Europe, rose to 50.2 in January from 49.3 in December.

January was the first time the index has been above the 50 mark that separates growth from contraction since June of last year.

The latest reading was also ahead of the consensus expectation of economists who forecast 49.8 for January.

Moderate winter temperatures, falling gas prices, and positive consumer spending have helped give business activity across Europe a boost.

Pressure on Germany's economy, which is the largest in Europe, eased in January as inflation slowed and business optimism increased.

In France, Europe’s second biggest economy, business output fell slightly in January, though manufacturing activity improved for the first time since August 2022.

The U.S. dollar is also at a nine-month low against the Euro currency, helping to improve business activity.

Factory activity in Europe showed an improvement in January, though it still declined. The manufacturing PMI rose to 48.8 from 47.8 in December.

As it continues to battle inflation, the European Central Bank (ECB) is widely expected to deliver a 50-basis point interest rate increase at each of its next two meetings.