Econintersect: The October Eurozone PMI (Purchasing Managers’ Index) was 51.3, up slightly from September’s reading of 51.1. Ireland surged into the lead of the EU-17 parade with a reading of 54.9 , edging the Netherlands, Septembers leader, which dropped to 54.4. Ireland achieved a 30-month high. The only two countries below the 50 level, which marks the boundary between expansion and contraction, were France (49.1) and Greece (47.3). Both countries have been slipping lower in recent months.
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Italy (50.7) and Spain (50.9) both had readings above 50 for the third month in a row. Both countries have been hard hit by austerity and continuing extremely high unemployment. The current improvement readings, while encouraging, must persist and improve further for many months before the climb out of a very deep hole can gain much traction.
Chris Williamson, Chief Economist at Markit, commented on the latest report:
“The eurozone manufacturing economy is undergoing its strongest growth period for two-and-a-half years, since the mounting uncertainty caused by the escalating sovereign debt crisis hit businesses hard in 2011.
“While it is in some respects disappointing that the PMI has failed to show a steeper pick-up over the last two months, the recent growth revealed by the survey indicates a marked turnaround in the health of the manufacturing economy. While the survey was signalling a 2-3% annual rate of decline in industrial production earlier in the year, a 2-3% rate of expansion is now being indicated.
“However, while the recovery goes on, it is by all measures frustratingly slow. In particular, the modest gains in output and new orders remain insufficient to encourage firms to take on more staff.
“More encouraging indications about the recovery can be gained by looking at the increasingly broadbased nature of the upturn, and especially the fact that increasingly robust gains in production are now being seen in countries such as Spain, Italy and Ireland, to suggest that structural reforms to boost competitiveness are starting to pay off.”
Here is the press release from Markit:
The eurozone manufacturing sector carried its modest third quarter recovery into the final quarter of the year. Though modest overall, growth continued to come from a broad base with expansions signalled in all but two of the nations covered by the survey. Only France and Greece saw deteriorating conditions, while rates of growth accelerated in Austria, Germany, Ireland and Spain.
At 51.3 in October, edging higher from 51.1 in September, the seasonally adjusted Markit Eurozone Manufacturing PMI® signalled an improvement in overall operating performance for the fourth straight month. The final reading was also unchanged from the earlier flash estimate released on 24th October.
Ireland climbed to the top of the eurozone PMI league table, overtaking the Netherlands which slipped to second place. Growth hit a near two-and-a-half year peak in Austria and ticked higher in Germany, Ireland and Spain, but slowed slightly in Italy. The rates of contraction in France and Greece were the sharpest for four and three months respectively.
Eurozone manufacturing production and new orders both rose for the fourth consecutive month in October. The rate of growth in output volumes was the second-strongest for almost two-and-a-half years, bettered only by that signalled in August.
The latest data also suggested that eurozone manufacturers should eke out further production growth in the coming months. Apart from the nascent recovery in new orders, October saw stocks of finished goods fall further and backlogs of work edge higher.
Source:
- Markit Eurozone Manufacturing PMI® – final data (Press release, Markit, 04 November 2013)