Recovery took firmer hold of the euro zone's dominant service sector in August as new business grew and confidence improved, a survey of 2,000 companies showed today.
The Reuters euro zone business activity index rose further above the 50 level that divides shrinkage from growth to reach 52.0, marking the fastest rate of expansion since mid-2002, and beat a consensus forecast of 51.0.
"There's an across-the-board improvement in the business environment, with consumer and business confidence returning gradually but surely after the Iraq war," said Mr Chris Williamson, chief economist at NTC Research, which compiles the survey.
It was the second month of expansion for the service sector, following the PMI's jump to 50.2 in July from 48.2 in June.
It was also the first time in 13 months that all the big four euro zone national economies - Germany, Italy, France and Spain - recorded growth in service sector business activity.
The latest survey showed new business across the region expanding again for the first time since December, while the expectations index, based on whether companies think business will be better in a year's time, edged up to a 12-month high.
"A general attitude towards a clearer growth path ahead is emerging from the survey," said Mr Williamson.
Service sector business continued to grow in both Italy and France, while in Germany, the 12-nation euro bloc's largest economy, activity expanded for the first time since July 2002.
The services survey follows a similar report on Monday which showed contraction in the euro zone's manufacturing industry slowed in August, as output stabilised, job cuts slowed, and new orders grew.
The euro zone surveys should underpin expectations that the European Central Bank will leave its official interest rate unchanged at 2.0 per cent tomorrow.
A comparable survey of the US service sector, published by the Institute for Supply Management, is due for release tomorrow.
The consensus forecast is for the index to ease to 63.0 from 65.1 in July.