German private sector output growth unexpectedly rose in March, registering its strongest activity in almost six years and underlining optimism over the health of the euro zone's largest economy, according to data released on Tuesday.
Trevor Balchin, a senior economist at IHS Markit, said: "Inflationary pressures continued to build, with input and output prices both rising at the fastest rates in around six years".
The latest reading was the highest since April 2011. The services activity growth hit a 15-month high.
The reading, a 70-month high, overshot the consensus forecast in a Reuters poll of economists and was above the 50 mark that separates growth from contraction.
Markit's flash USA composite output index - which measures both the manufacturing and services sectors - fell to 53.2 from 54.1 in February, hitting a six month low. Moreover the German Flash Services PMI increased from 54.4 to 55.6, beating the 54.5 forecast, the indicator has reached the November 2015 high and has boosted the Euro, while the German Flash Manufacturing PMI has increased unexpectedly higher, was reported at 58.3 points, much higher versus the 56.6 estimate and versus the 56.8 in the reading period.
By country, growth accelerated in Germany to the strongest level since May 2011, driving job creation to the highest for six years.
Output expectations also strengthened in March and in the services sector sentiment was strongest in more than six years.
"The acceleration in growth towards the end of the quarter, as well as improving trends in new business and an increased appetite to hire, suggest that strong growth momentum will be sustained into the second quarter", the economist added.
A gauge of euro-area factory activity jumped to 56.2 this month from 55.4 last month and an index of services surged to 56.5 from 55.5.
The PMI for the German manufacturing sector this month was 58.3, well above both the expected 56.5 and February's 56.8.
"Perhaps the best news came from France, where growth has risen above that seen in Germany, led by strengthening domestic demand". The expected reading was 56.1.