The eurozone manufacturing sector continued to make solid progress at the end of 2015, as rates of growth in production, new orders and new export business all improved. Although input costs and output charges fell again, trends in both provided further evidence of deflationary pressures easing.
At 53.2 in December, up from 52.8 in November, the final seasonally adjusted Eurozone Manufacturing PMI® rose to its highest level since April 2014 and came in slightly above the earlier flash estimate of 53.1. The average PMI reading for the final quarter (52.8) was the best growth outcome since the first quarter of 2014, while the average for 2015 as a whole (52.2) was better than those achieved in each of the prior three years.
With the Greek PMI edging back above 50.0, December saw PMI readings in all of the nations covered at levels signalling expansion for the first time since April 2014. Italy remained the fastest growing, with its rate of expansion improving to a 57-month record. Accelerated growth was also signalled for Ireland (five-month high), Germany (four-month high) and France (21-month record), while slower increases were seen in the Netherlands, Spain and Austria.
Over the final quarter as a whole, the respective average readings for the Output Index, New Orders Index and New Export Orders Index were all above their third quarter postings. The average for the Employment Index was slightly below Q3.
December data signalled the steepest rise in eurozone manufacturing production since April 2014, as output was driven higher by faster inflows of total new orders. Production rose in all of the nations covered, while only Austria and Greece failed to report increases in new orders.
The trend in new export business at eurozone manufacturers also improved, with the rate of growth reaching a seven-month high. New export orders increased in Germany, France, Italy, Spain, the Netherlands and Ireland, but fell in Austria and Greece.
The stronger gains in new work also exerted additional pressure on capacity, as highlighted by the sharpest accumulation of backlogs of work in almost two years. This led to further job creation, with the rate of increase in staffing levels identical to November’s three-month high.
With employment edging higher in France and Greece following sustained periods of job shedding, December saw increases in manufacturing workforce levels recorded in all of the nations covered by the survey for the first time since August 2007. Faster rates of expansion were signalled in Italy and Austria, with slower gains in Germany, Spain, the Netherlands and Ireland.
Price pressures remained on the downside during the latest survey month, with December seeing input costs and output charges both decrease further. However, rates of deflation were slower in both cases, with the reduction in output prices particularly modest.
Only Greece reported an increase in manufacturing purchase prices, while the other nations all saw slower rates of decrease. Output charges rose in Germany, Italy and Ireland.