Hopes that the eurozone is recovering from its crippling economic crisis were given another boost on Monday, with a key European index surging to its highest level in 27 months.

The London-based research group Markit said its closely watched Purchasing Managers’ Index (PMI) for the region’s manufacturing and service sectors rose to 52.1 points in September. Analysts had expected a more moderate rise to 51.7 points.

It was the sixth monthly increase in a row for the index, which is based on a survey of about 5,000 companies in the eurozone. Germany continued to lead the upswing, but France also posted a rise in business activity for the first time in 19 months.

“An upturn in the eurozone PMI in September rounds off the best quarter for over two years, and adds to growing signs that the region is recovering from the longest recession in its history,” Markit chief economist Chris Williamson said.

He also warned, however, that “the overall rate of growth signalled by the eurozone PMI remains modest.” “The eurozone’s recovery still rests on fragile foundations,” noted James Howat of the Capital Economics research group.

“A further strong acceleration in the pace of recovery seems unlikely in the near term,” ING analyst Martin van Vliet added.

“Overall growth will probably remain too weak to create job growth for quite some time to come — which is what is ultimately needed to make this recovery self—sustaining.” Van Vliet predicted that recent encouraging data lower the odds that the European Central Bank (ECB) “will follow up its forward guidance rhetoric with action.” The bank had committed in July to keeping interest rates at “their present or lower levels for an extended period of time.” Borrowing costs are currently at an historic low of 0.5 per cent.

Its rate-setting council will meet next on October 2 in Paris.

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