At 54.0 in January, a shade higher than the flash estimate of 53.9, the seasonally adjusted Markit Eurozone Manufacturing PMI® confirmed the strongest rate of expansion in the eurozone manufacturing sector since May 2011. The headline PMI has risen in each of the past four months and has signalled growth since July last year. The improved performance of manufacturing was underpinned by solid expansions in production, new orders and new export orders, all of which rose at the fastest rates since April 2011. At its current level, the Output Index is signalling quarterly growth of at least 1.0%.
The base of the recovery also broadened in January. Greece’s PMI moved back into growth territory for the first time since August 2009, joining the ongoing expansions seen in Germany, Italy, Spain, the Netherlands, Austria and Ireland.
The upturn was led by Germany, where growth hit a 32-month record. Rates of increase also remained solid in the Netherlands and Austria – despite a sharp easing in the Netherlands – while Spain was the only nation except Germany to see its rate of expansion quicken.
Apart from stabilisation in a number of domestic markets, companies attributed further expansion to rising levels of new export business as global market conditions continued to strengthen. With France and Greece both seeing returns to growth for new export business, all of the nations covered by the survey reported concurrent increases in exports for the first time since May 2011.
Job creation was recorded for the first time in nearly two years during January. Although the pace of growth in payroll numbers was modest, it was still the steepest since September 2011. Rates of manufacturing job creation accelerated in Germany (two-year record), Italy (32-month high) and Ireland (two-month peak), while employment also rose in Spain and Austria following periods of decline. Meanwhile, job losses slowed in France and Greece, but the Netherlands reported a decrease in staffing levels for the first time in five months.
Higher employment represented a response by manufacturers to improved demand and the sharpest rise in backlogs of work for almost three years, both of which suggested that the expansion in output could run further in the coming months. Signs of rising confidence were also provided by the steepest increase in input purchasing since mid- 2011.
Price pressures were relatively muted during January. Input costs rose at the slowest pace for four months. The rate of output price inflation, meanwhile, was only moderate and the weakest since last October. Germany, Italy and Austria were the only nations to report higher selling prices.
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