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Eurozone manufacturing improves markedly

Europe’s manufacturing sector shrugged off market concerns about public debt levels in December, with a marked improvement in a key indicator extending to some of the troubled “peripheral” countries for the first time.

The eurozone purchasing managers’ index rose to 57.1 in December, up from 55.3 in November and 0.2 points higher than an earlier estimate. A reading above 50 indicates growth in manufacturing output.

The revised data released on Monday showed that although the German-led “core” of the eurozone remains the engine behind its economic recovery, there are signs that the troubled “periphery” is also improving.

welcome signs of recoveries were also evident in the periphery, where export sales helped boost output growth in all cases except Greece, where the rate of decline at least moderated

the small increase in the periphery will help ease fears of a “two-speed Europe” which emerged in 2010 as Germany powered ahead while much of southern Europe remained stuck in the mire.

Joblessness in the eurozone has remained at 10 per cent since spring in spite of a pick-up in economic output. Now the PMI survey shows hiring intentions at their highest level in more than a decade.

But the good news was partly tempered by sluggish growth for consumer goods manufacturing, a sign that shoppers remain cautious. Economists worry that the scope for economic recovery in Europe will be limited without a marked pick-up in consumer spending, particularly in Germany.

Julian Callow of Barclays Capital termed it a happy new year’s message from the manufacturing sector: “[It] provides further evidence that, contrary to the tensions in the debt markets, the business sector has continued to exhibit economic improvement.” Read more at www.ft.com

 

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