Factories in the euro area witnessed strong price increases in January while Services sector too posted better-than-expected growth, suggesting the eurozone has made a solid start to the year.

The Markit services purchasing managers' index (PMI) rose from 55.5 to 56.3, which was better than the consensus forecast of a small fall to 55.0 and left the index at its highest level since July.

On the face of it, the index points to quarterly GDP growth of around 0.7%, far stronger than Q3’s 0.3% gain, said Ben May, European economist at Capital Economics, in a note.

Meanwhile, the manufacturing index fell for the first time since September. But the decline was small and the index still points to pretty healthy industrial growth.

... some encouraging signs here that the recovery may have recently regained momentum. But as the fiscal squeeze spreads to the core and the external recovery loses steam, the euro-zone revival is likely to falter, said May.

Meanwhile, a Eurostat report said on Monday industrial new orders rose 2.1 percent month-on-month in November, helped by strong showing in Portugal, Finland and Germany.