Private sector manufacturing activity in the euro zone continued to recover in December, revised data on Thursday showed, indicating stronger growth in the euro area, but the rate of decline in France accelerated, raising concerns that the country could fall back into a recession.
The euro zone’s manufacturing purchasing managers’ index held steady at a 31-month high of 52.7 in December, unchanged from a preliminary reading and up from 51.6 in November.
For the final quarter as a whole, the sector is recording its best performance in two-and-a-half years, consistent with a quarterly pace of output growth of around 0.6%.
Commenting on the report, Chris Williamson, Chief Economist at Markit, said, “The latest numbers are consistent with production growing at a quarterly rate of approximately 1% at the end of the year.”
Private sector output in the euro zone’s largest economy continued to expand in December, with Germany’s manufacturing PMI rising to a 31-month high of 54.3, up from a preliminary estimate of 54.2 and improving from 52.7 in November.
Spain’s manufacturing sector returned to expansion territory last month, while the Italian manufacturing sector grew at the fastest pace since April 2011, fuelling optimism over the economic outlook of the euro zone’s third-and-fourth largest economies.
The Spanish PMI rose to 50.8 from 48.6 in November, led lower by stronger orders and output. The Italian index improved to 53.3 last month from 51.4 in November.
There was even relatively positive news from Greece, where higher levels of output and new orders elevated its PMI to a 52-monthhigh and close to the 50.0 stabilization point.
France moved in the opposite direction, however, with data showing that the contraction in the country’s manufacturing sector deepened in December. France’s manufacturing PMI fell to a seven-month low of 47.0 from 48.4 in November.
The weak data raised concerns that the French economy could post a second successive quarterly decline in the three months to December, after a contraction of 0.1% in the third quarter, which would push the country back into a recession.
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