A further sign of recovery in the Eurozone is that orders for factory goods have seen a fourth straight month of rising demand in October. The data comes in the shape of the latest Markit Manufacturing Purchasing Managers’ index (PMI) which strengthened from 51.1 in September to an October reading of 51.3. On this scale, values below 50 show contraction in the sector whereas higher figures show growth. The fact that the figure has been strengthening for the past four months indicates that a recovery has been taking hold in the sector. However, the Eurozone PMI figure is still relatively week. The UK enjoyed its best PMI figure for six years, coming in with a reading of 59.4.
The Eurozone figure for PMI is an aggregate score for all 17 Eurozone economies, of course, meaning that the figure is dragged down by economies which are struggling, but is buoyed by German output. German PMI for October came in at 51.7, by way of comparison. France and Greece were the only two Eurozone economies not to see an improved PMI figure in October.
The good news is that some Eurozone factories are finding it hard to keep up with demand for finished goods, however, according to Markit’s chief economist, Chris Williamson, this may not yet boost employment within the bloc: "While the recovery goes on, it is by all accounts frustratingly slow. In particular, the modest gains in output and new orders remain insufficient to encourage firms to take on more staff. Output charges rose for the second successive month, but the rate of inflation remained marginal as competition remained strong and market demand lacklustre."
In any event, the current data marks a step in the right direction, albeit a small step, perhaps.