Eurozone purchasing managers noted strengthening price pressures in January as manufacturing activity remained close to record levels in the core countries of France and Germany.
While the rate of growth in output and new orders eased from their near-record highs seen at the end of 2017, the IHS Markit purchasing manager index (PMI) remained near the best levels ever seen.
Purchasing manager index
The headline manufacturing PMI eased to 59.6 in January, from 60.6 in December, as expected. The 50 level indicates the boundary between contraction and growth - the higher above 50, the stronger the implied growth in business activity.
Eurozone manufacturing PMI has signalled expanding business activity in each of the past 55 months thanks to a powerful economic performance in Germany and improving conditions in France and other core eurozone countries.
Confidence among the survey's respondents remained high - with optimism rising to its highest level since the survey began in 1997 as companies experienced solid inflows of new work from both domestic and export markets.
Price pressures increased, however, with both input costs, from higher raw materials prices, and output charges passed on to clients, rising at faster rates than in the previous month. Output, or factory gate inflation, rose to an 80-month high.
"With higher costs being increasingly passed on to customers, the survey sends a warning signal for a potential rise in future consumer price inflation," said Chris Williamson, chief business economist at IHS Markit.
Claus Vistesen at Pantheon Macroeconomics said: "By all accounts, the eurozone manufacturing sector roared ahead at the start of the year, despite the headline dip in the PMI, maintaining its strong momentum from 2017.
"The headline PMIs in France and Germany fell slightly in January, but at 58.4 and 61.1 respectively, they continue to signal robust growth in industrial production at the start of the first quarter."
The euro was stronger against most other currencies except a resurgent pound. The single currency rose 0.23% against the dollar to $1.2442 and was up 0.66% versus the yen to Y136.42.
European stocks were also higher with the EuroStoxx 50 index up 0.33% at 3,618. Both the German Dax and the French CAC indexes were up 0.3%.