- Private sector activity in the euro zone got off to a strong start in 2014, data on Thursday showed, as growth picked up in Germany, while the rate of the downturn in France eased as both its manufacturing and services sector beat expectations.

The euro zone’s composite output index rose to a 31-month high of 53.2 in January, up from a final reading of 52.1 in December, fuelling hopes that the European Central Bank will not need to ease monetary policy further in order to shore up the recovery.

The new orders index rose across the euro area rose for a sixth successive month, matching December''s 30-month high of 52.2, spurring optimism that the expansion will continue into next month.

The preliminary reading of the euro zone’s manufacturing purchasing manager’s index rose to a 32-month high of 53.9 from 52.7 in December. Analysts had expected the index to rise to 53.0.

The region’s services PMI advanced to a four-month high of 51.9 from 51.0 in December, compared to forecasts for a reading of 51.4.

Manufacturing activity in Germany expanded at the fastest pace since May 2011 this month. Germany’s manufacturing PMI rose to 56.3 in January from 54.3 in December. Analysts had expected the index to tick up to 54.6.

However, Germany’s services PMI rose to 53.6 from 53.5 in December, slightly below expectations for a reading of 54.0.

Manufacturing and services sector activity in France expanded at a faster than expected rate in December, but remained in contraction territory.

France’s manufacturing PMI ticked up to 48.8 from 47.0 in December, beating expectations for a reading of 47.5. The country’s services PMI rose to 48.6 from 47.8 last month, compared to expectations for an increase to 48.1.

“The upturn in the PMI puts the region on course for a 0.4-0.5% expansion of GDP in the first quarter, as a 0.6-0.7% expansion in Germany helps offset a flat-looking picture in France,” Chris Williamson, chief economist at Markit said.

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