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Eurozone Manufacturing Reaches 31-Month High: Markit

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Eurozone Manufacturing Reaches 31-Month High: Markit

Manufacturing activity in the Eurozone rose to a 31-month high in December, as stronger output growth and fuller order books eased the pace of job cuts.

Markit Group’s gauge of Eurozone manufacturing activity rose 1.1 percentage points to 52.7 in December, matching analysts’ forecast. A reading above 50.0 signifies expansion in the manufacturing industry, whereas a reading below that level signals contraction.

Eurozone manufacturing activity rose for the third consecutive month, signalling the strongest quarterly expansion in two-and-a-half years. Growth was broad-based in December, led by the Netherlands, Germany, Ireland and Italy. The rate of growth eased in Austria, but remained positive. In Greece, higher levels of output and new orders contributed to the best PMI reading in 52-months. Manufacturing activity in France, however, continued to deteriorate, as the country’s factory gauge fell to a seven-month low.

Growth in new orders was underpinned by new export business, which expanded for the sixth consecutive month. Among Eurozone members, only France and Greece reported lower levels of new export business.

“A strengthening upturn in the manufacturing sector is helping the euro area recovery become firmly established,” said Chris Williamson of Markit. “The latest numbers are consistent with production growing at a quarterly rate of approximately 1 percent at the end of the year.”

December factory data suggest euro area recovery is gaining traction, as some of the currency bloc’s largest members accelerated further. While Germany, Italy and Spain experienced the strongest pace of output growth since early-2011, France continues to lag considerably behind. Competitiveness is a major issue for the euro area’s second-largest economy, which is experiencing a “steepening downturn,” due in part to widening export losses.

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