New surveys have shown that the euro zone's service sector grew at its fastest pace in more than two years during early December while the manufacturing sector grew at a rate not seen since March 2008.
The euro zone flash service purchasing managers' index, compiled by research group Markit, rose more than expected to 53.7 in December from 53 in November, its highest since November 2007.
That marks the fourth month the index has been above the 50 mark that divides growth from contraction, and was ahead of economists' expectations.
The euro zone economy had shrunk for five consecutive quarters but returned to growth of 0.4% in the July-September period and is expected to grow 0.5% in the current quarter.
The new business index climbed to a 25-month high of 53 from 51.2, a good sign that business activity is set to rise again next month as those orders are filled.
Manufacturing activity also growing
The euro zone manufacturing sector, which drove a large part of the return to growth in the third quarter, grew at its fastest pace in 21 months. The flash manufacturing index rose to 51.6 from 51.2 in November, slightly better than expected.
The manufacturing output index rose to a 27-month high of 55.2 from 54.8 in November. The backlogs of work index jumped to 51.9 this month from 50.2 in November, suggesting there was more demand than firms were currently able to meet.
The index was languishing at just 29.2 this time last year, the lowest in the survey's 12-year history. The rise across the services and manufacturing sectors took the composite index to a 26-month high of 54.2 from 53.7 in November, ahead of economists' expectations for 53.9.
Eurostat confirms prices rising again
Separate figures have confirmed that the euro zone's annual inflation rate turned positive in November for the first time in seven months.
As continental Europe's economy pulls out of recession, prices climbed 0.5% over 12 months, according to revised figures from the EU's Eurostat data agency. This was slightly less than its earlier 0.6% estimate, but a sharp turnaround from a 0.1% drop in October.
It is the first time that euro zone prices, compared with a year earlier, have risen since April, and largely reflects energy costs that have risen again after a collapse in the price of oil and gas during the financial crisis.
