The private sector in the Eurozone has expanded faster-than-expected in January, raising optimism for economic growth this year.

The Purchasing Managers’ Index (PMI) rose to 51.3 points in January, reaching its highest level since August. The PMI for the services sector alone reached 52.5 points in January, compared to 52.2 points in December.

In Germany, the total PMI rose to 51.2 points, while the PMI for the services sector remained at 54.2 points in January.

In France, on the other hand, the PMI to 51.1 points, but nevertheless remained above the 50 points line separating contraction from expansion. PMI for the services sector also fell to 51 points, compared to 52 points reported in December.

However, among the major economies in the European Union, the biggest improvement is in Italy. Activity in the services sector reported an increase of up to 51.4 points, while the total PMI increased significantly from 49.3 points in December to 50.4 points in January.

Eurozone data alleviate concerns that persistent weakness in the industry may reduce domestic demand. Although companies in the region are still facing some risks, business confidence for the next 12 months has risen to its highest level since September 2018.

“Manufacturing is showing positive signs of stabilization after the sharp downturn seen last year, and the growth of the service sector remains encouragingly sustainable”, said Chris Williamson, an economist at IHS Markit. “We expect growth to accelerate steadily in 2020”, added he.

Chris Williamson said that following the fall of trade tensions between the US and China, Europe appears to have become a new center for US President Donald Trump’s rhetoric. The automotive sector can be particularly vulnerable to the threat of customs duties. Trade talks with the UK during the year can also increase business insecurity, he added, just as the outbreak of a coronavirus in China threatens to disrupt global economic growth.

“Subsequently, we expect the eurozone to avoid a recession in 2020, but to face difficulties of 1% growth”, said Chris Williamson.

On the other hand, activity in the recent EU Member State, Britain, has seen impressive results. The overall PMI reached its highest value in the last 16 months of 53.3 points in January. The PMI for the services sector also rose to 53.9 points from the 52.9 points recorded in December.