European Market Commentary
11/2/2009 7:37 AM ET
(RTTNews) -
Eurozone manufacturing industry expanded for the first time in seventeen months in October, strengthening expectations that the 16-nation economy recovered from the worst recession.
The purchasing managers' index for the region's manufacturing sector rose to 50.7 in October from 49.3 in September, survey data released by Markit Economics showed Monday. That was unchanged from the flash estimate released on October 23 and was the highest reading since May 2008. A PMI reading above 50 suggests expansion in the sector.
"With capacity now coming into line relative to order books, and further growth of production looking likely in coming months as factories restock, conditions are set to improve further," Markit Chief Economist Chris Williamson said.
Output increased for the third month running in October and signaled the strongest monthly expansion since January of last year. However, output disparities widened within the euro area.
According to Markit, French manufacturers reported a further marked acceleration in output growth to outperform all other euro nations by a wide margin. Germany saw the second strongest growth, as output rose at the fastest pace since June of last year, closely followed by Austria and the Netherlands, which both likewise saw growth accelerate during the month. In contrast, output fell in Spain, Ireland and Greece.
Eurozone manufacturing new orders rose by marginally more than estimated by the earlier flash reading, showing the largest monthly rise since August 2007. France and Germany reported considerably stronger increases in new orders than other countries. Only Spain, Greece and Ireland saw lower levels of new orders.
New export orders rose at a slower pace than total new orders, hampered by the strong euro. But, it recorded the largest increase since January of last year as manufacturers benefited from resurgent demand in many markets. The Netherlands, Germany, France and Austria all saw robust export order growth, but marked declines were seen in Spain, Italy and Greece.
Stocks of finished goods continued to fall at a steep pace. Inventories fell in all countries, led by Germany. Employment fell slightly less sharply than indicated by the flash report. However, the rate of job losses has eased sharply in recent months to the weakest for a year. Staffing levels fell in all countries covered by the survey, but rates of decline eased in Germany, France, Spain and Austria.
Input prices rose for the first time for a year, driven by rising commodity prices and higher rates from suppliers. The increase in prices was greater than the flash estimate. Prices charged fell for the twelfth month in a row, though the decline was less than indicated by the flash estimate and the weakest since last November. Manufacturers in all countries reported lower selling prices, though rates of decline slowed in Germany, Spain, Ireland and Austria.
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