Eurozone Manufacturing Growth Accelerates In December

Eurozone manufacturing conditions improved to its highest level since May 2018 driven by stronger rises in output and new orders, final data from IHS Markit showed Monday.

The manufacturing Purchasing Managers’ Index rose to 55.2 in December from 53.8 in November. The reading was below the flash estimate of 55.5.

The headline reading was above the crucial 50.0 no-change mark that separates growth from contraction for a sixth successive month.

The economy looks set to be hit by the pandemic in the fourth quarter far less than the unprecedented decline in the second quarter, Chris Williamson, chief business economist at IHS Markit said.

However, rising virus case numbers are likely to mean trading conditions remain challenging in the near-term and therefore constrain growth, the economist added.

Manufacturing output increased for the sixth straight month. The improvement was linked to a similar-sized increase in new orders.

However, firms on average made further cuts to their staffing levels, extending the current period of decline to 20 months.

Operating expenses of manufacturers rose to the greatest degree since November 2018. Selling prices were subsequently increased for a third consecutive month and at the fastest rate since February 2019.

Confidence about the coming 12 months improved to the highest level in nearly three years as optimism rose on hopes that operating conditions would be closer to normal by the end of 2021.

Growth was again led by Germany, where the rate of expansion was the best for nearly three years. Italy reported solid growth in December compared to much more moderate gains in France and Spain.

Germany’s manufacturing sector continued to recover from the shutdowns induced by the pandemic. The manufacturing PMI advanced to 58.3 from 57.8 in November. This was below the flash reading of 58.6.

The French manufacturing sector rebounded in December, predominantly driven by a renewed expansion of production, which helped to offset a further decline in new orders. The final factory PMI came in at 51.1, in line with the flash estimate, and up from 49.6 in November.

Italy’s manufacturing conditions improved in December with output growth quickening amid a renewed upturn in order book volumes. The factory PMI rose to 52.8 in December from 51.5 in November.

Spain’s manufacturing economy returned to growth in December. The manufacturing PMI came in at 51.0 compared to 49.8 in the previous month.

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