Eurozone manufacturing Rock&Rolls brightening outlook for 2018

The economies of the Euro area are on the positive path given the simultaneously positive reading of forward-looking indicators like purchasing managers surveys (PMI). Although simplified, the PMI readings provide a single digit picture of the state of the manufacturing sector in a country based on a survey of purchasing managers on segments like output, order, export or employment.

Final manufacturing PMI in Eurozone ticked up to 60.1 in November as growth in manufacturing output and new orders climbed to multi-year highs, supporting survey-record job creation.  The manufacturing PMI readings are at, or near record highs in Germany, the Netherlands, Austria, and Ireland.

In Eurozone’s biggest economy, Germany, manufacturing PMI jumped to 62.5 in November, rising from 60.6 in October. November PMI was its second-highest reading of PMI since the survey began in 1996 as new order growth was the fastest since March 2010.

“The German manufacturing PMI continued its ascent in November to come within a whisker of an all-time high. In over two decades of data collection growth has only ever been better once before, in early-2011 when production levels were still recovering from a financial crisis-induced slump,” Phil Smith, principal economist at Markit commented on the results in the report.

French manufacturing PMI hits a seven-year high of 57.5 in November as manufacturing output and new order growth accelerated and the rate of job creation rose second-sharpest in 17 years.

“The latest data continued to paint a positive picture of the French manufacturing sector, with output, new orders and employment all expanding at marked and accelerated rates. Given these positive trends, the sector looks well-placed to maintain its solid overall growth rate as we close out 2017. Indeed, averaging 56.9 for October and November, the headline PMI is on course for its best quarter in 17 years,” Alex Gill, author of the PMI report said on Friday.

Italian final manufacturing PMI rose to 58.3 in November as gains in new orders reached the highest level in over 17-and-a half years and growth of new export sales and output hit the highest level since February 2011.
“Italy’s manufacturing industry continued to soar in November as strong external demand, especially for capital goods, continued to underpin surging levels of output in the sector. With a seemingly strong demand pipeline, a growth of the sector should be sustained in the coming months, but difficulties in sourcing raw materials and rising cost pressures could act as a constraint on expansion,” Paul Smith, author of the PMI report noted.

In Spain, manufacturing PMI rose to 56.1, the highest level since February 2007 as manufacturing output expands at fastest pace in two-and-a-half years and growth of exports and purchasing also among the sharpest recorded to-date. The employment sub-index of manufacturing PMI recorded near-record rise in November.

“Growth of workloads continues to be good news for the manufacturing labor market, with employment increasing to the greatest extent in the best part of 20 years. The sector is clearly in good shape as 2017 draws to a close, with hopes of continuing strong performance in 2018,” Andrew Harker, the author of the PMI report said.