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Manufacturing Continues to Drive Eurozone Recovery: Markit

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Manufacturing Continues to Drive Eurozone Recovery: Markit

The Eurozone manufacturing industry expanded for the eighth consecutive month, as output and new orders continued to drive recovery.

Markit Group’s gauge of Eurozone manufacturing activity declined from 54 to 53.2 in February. Despite the fall, the PMI was 0.2 percentage points above forecasts, according to a median estimate of economists polled by Reuters. A reading above 50 signifies expansion in the manufacturing industry.

Factory activity in February eased from the previous month’s two-and-a-half-year high, Markit data showed. Nevertheless, the report showed further signs of recovery in the euro area’s periphery, notably in Spain, where manufacturing activity reached a 46-month high. Contraction eased in France, as the manufacturing industry there reached a five-month high. France was the only nation among the seven surveyed to report contraction last month.

All seven nations for which data were available reported increased production and new orders. The expansion was broad-based, with output, new orders and new export orders all rising at a solid pace. The outlook on production remained positive, with work backlogs rising for the fifth consecutive month. Stronger factory activity boosted hiring for the second consecutive month, Markit said.

“With new orders and backlogs of work still rising at reasonable rates, further ongoing expansion is signalled for coming months.” wrote Markit chief economist Chris Williamson. “Employment has now also risen for two consecutive months… Job growth is still very weak though, and manufacturing will not help bring about any rapid falls in the region’s near-record unemployment rate any time soon.”

Industrial production is growing at a rate of 1 percent in the first quarter, Williamson said. This translates into a substantial boost to the economy. As a result, Eurozone GDP is expected to rise by around 0.5 percent in the first three months of the year, Williamson added.

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