The latest Markit Purchasing Managers’ Index (PMI) for manufacturing in the bloc of 18 nations using the Euro, has shown that the rate of growth has picked up slightly. The value surged ahead in October to 50.6, up from a September reading of 50.3. Whilst this is a move in the right direction, suggesting that the pace of manufacturing growth is picking up within the Eurozone, it has come in below expectations and the initial estimates for the month.
A PMI value above 50 indicates that the sector under study is growing whilst a figure below this level indicates contraction. The bloc as a whole may have shown growth, but the French and Italian manufacturing sectors have contracted. The largest economy within the Eurozone, Germany returned an individual reading of 51.4 for October, a good increase on the September figure of 49.9 (but again, lower than the initial reading).
On a positive note, Spain returned its 11th consecutive month of manufacturing sector growth and unemployment has fallen from a peak of 26.9% to stand at 23.7% (July data).
Italy has seen the manufacturing sector contract after expansion in September whilst France’s manufacturing decline worsened (50.7 and 49; 48.8 and 48.5, respectively). Italian economic growth for the economy as a whole is expected to come in as a contraction of 0.3% for 2014 rather than the 0.6% projected growth forecast earlier.
Commenting on the data, Rob Dobson, a senior economist at Markit noted: “The performance of Eurozone manufacturing remained broadly flat at the start of the final quarter. Manufacturing is therefore unlikely to provide any meaningful boost to the currency union's anaemic GDP growth. Perhaps most worrying is the trend in new orders, a key bellwether of future output growth, which declined for the second month running. It is hard to see any significant near-term boost to performance.”