Preliminary figures from data provider IHS Markit show that eurozone private sector growth continued to be strong in February, even though the rate of expansion weakened slightly from the near 12-year high seen in January, as higher prices and a stronger currency are taking their toll.

The IHS Markit composite Purchasing Managers’ Index (PMI) for February implies that the eurozone economy is expanding at a quarterly pace of 0.9 per cent, the fastest rate in eight years, even though the measure fell to 57.5 in February from 58.8 in January.

An improvement in business optimism “bodes well, suggesting that companies are expecting the slowdown to be short-lived,” said Chris Williamson, chief business economist at IHS Markit.

Meanwhile, according to the minutes of its most recent meeting, the Federal Reserve (Fed) showed more confidence in the need to keep raising interest rates over the course of this year, with most policy members opining that inflation would perk up.

The more upbeat view on inflation will further confirm investor expectations that the Fed’s new chairman Jerome Powell will guide his colleagues in raising interest rates in next month’s meeting.

The Fed’s preferred measure of inflation has been below its two per cent target rate for nearly six years but the Labour Department reported earlier this month that, in January, underlying consumer prices posted their biggest rise in more than a year.

Finally in the UK, the jobless rate increased for the first time in nearly two years in the fourth quarter of last year, reducing the prospects of an interest rise before the summer. Figures published by the Office for National Statistics showed that the unemployment rate rose to 4.4 per cent in the three months to December from 4.3 per cent registered during the three months to September.

This was the first increase in almost two years. Economists had predicted that the jobless rate would remain unchanged.

The Bank of England said this month that the UK economy was beginning to overheat after a sharp rise in inflation and a tightening labour market.

This report was compiled by Bank of Valletta for general information purposes only.