- The eurozone economy picked up further momentum at the end of 2017, with December seeing the fastest growth of business activity for nearly seven years.

The headline IHS Markit Eurozone PMI rose to 58.0 in December, according to the flash estimate (based on approximately 85% of final replies), up from 57.5 in November and its highest since February 2011.

The upturn continued to be led by manufacturing, where the headline PMI rose to its highest since the series began in June 1997.

Faster manufacturing output growth (the best since April 2000) was accompanied by the largest monthly improvement in service sector activity since April 2011.

Activity rose in response to higher inflows of new orders, which showed the biggest monthly increase for just over a decade.

In manufacturing, the largest upturn in new orders since April 2000 was buoyed by export orders rising at a rate only marginally below November's record high.

Growth of new business in the service sector was meanwhile the joint-highest in over a decade, highlighting the broad-based improvement in demand.

Future expectations also improved, perking up in both sectors and reviving after two months of decline.

Buoyant job creation was again seen as firms boosted capacity in line with strong demand and the improved outlook. Measured across both sectors, employment growth was the joint-highest since September 2000, matching November's recent peak.

Despite the recent bout of strong hiring, capacity constraints continued to be reported, reflected in a further marked rise in backlogs of uncompleted orders. Backlogs rose especially sharply in manufacturing, with December seeing a similar rise to the record increase seen in November. Supply chains also likewise continued to be stretched as a result of strong demand, with average delivery times lengthening to an extent not seen since May 2000 as manufacturers reported a record increase in the amount of inputs purchased.

Strong demand was a key factor helping firms hike prices. Average charges for goods and services showed a slightly smaller rise than the prior two months but still recorded one of the largest increases since mid-2011. Higher prices also reflected the need to pass higher costs on to customers. Average input costs rose sharply again in both sectors, though especially in manufacturing. The overall rate of inflation dipped from November, but remained among the highest seen over the past six-and-a-half years.

By country, growth in France outpaced that seen in Germany for the third month running, though both countries recorded strong gains. Although growth in France eased slightly, it continued the best spell of expansion seen since the first half of 2011. German business activity meanwhile grew at its fastest since April 2011, with the manufacturing PMI notable in hitting a record high. While both countries saw manufacturing lead services in terms of output growth, expansions remained broad-based. Elsewhere, growth lagged behind France and Germany on average, though continued to run at one of the fastest rates seen since the global financial crisis.

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