Eurozone factory orders surge

2011-01-03 13:44

London - Surging new orders and a fast-improving labour market helped quicken the expansion of the eurozone's manufacturing sector for the fourth month running in December, a business survey showed on Monday.

The Markit Eurozone Manufacturing Purchasing Managers' Index (PMI), which records manufacturing activity across all the major euro area economies, rose to 57.1 in December, revised higher from a preliminary reading of 56.8 and up from 55.3 in November.

Representing the 15th month above the 50 mark that divides growth from contraction, the December figure neared April's 46-month high and once again reflected German and French strength leading the 16-nation bloc's industrial recovery.

The region is SA's largest trading partner.

While manufacturers in the eurozone's smaller economies have struggled to gain much momentum over the last six months, Markit said there were encouraging signs in the area's periphery during December.

"Germany remained the star performer, seeing near-record growth, followed by France, where the PMI slipped only slightly from November's 10-year peak," said Chris Williamson, Markit's chief economist.

"However, 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."

Despite enforced fiscal austerity and a sovereign debt crisis forcing government borrowing costs to unmanageable levels in peripheral economies like Ireland and Portugal, the survey showed eurozone manufacturers prospering.

The survey's output index rose to 58.4 last month, a five-month high and marked a jump from November's reading of 55.8.

Williamson said the data were consistent with industrial production rising across the single currency zone at a quarterly rate of 2%.

"Although down from May's near 3% peak, December's growth represents a reassuring revival from the slowdown seen during the autumn," he said.

A broadening factory labour market recovery, which last month spread to Ireland and Italy, pushed the PMI's jobs index to 53.8 in December, its highest level since October 2000 and up from November's 52.9.

Eurozone unemployment inched up to 10.1% in October from 10% the previous month, official figures showed on November 30. Economists polled by Reuters expect joblessness to trend around that level through 2011.

The new orders index also saw healthy gains last month, inching closer towards March's three-year high of 59.8. Markit said the rise was aided by renewed growth in Italy and Spain, although in Greece, new orders fell at the sharpest pace since March 2009.

Backlogs of work, which rose at the fastest pace since April, also bolstered December's manufacturing PMI December.

While overall the survey backed the view of a self-sustaining economic recovery taking place in the eurozone, economists still expect the bloc's rebound to be a tepid affair.

Analysts polled by Reuters last month expected quarter-on-quarter growth to remain stuck between just 0.3% and 0.5% in each quarter between now and the end of 2012.