The Markit Final Eurozone Manufacturing Purchasing Managers’ Index rose to a four-month high of 55.3 in November, up from 54.6 in October but below the earlier flash estimate of 55.5. The headline PMI has now remained above the neutral 50.0 level for 14 consecutive months.
Germany and France continued to lead the recovery. PMIs rose to a three-month high in Germany and hit a ten-year high in France, both on the back of marked growth in output and new orders. PMIs rose in the Netherlands (highest since May) and Ireland (four-month peak), but fell to nine- and ten-month lows in Italy and Austria respectively. Spain’s PMI fell to 50.0 as output and new orders sank back into contraction. The Greek PMI remained well below the no-change mark.
Rates of expansion accelerated for output and new orders in November. In both cases, however, the pace of increase was less marked than signaled by the earlier flash estimates and well below the highs seen in the first half of the year.
Manufacturing production rose for the 16th month running and at the fastest pace since August. France and Germany saw rates of expansion hit eight- and three-month highs, respectively, meaning growth was well above that seen elsewhere in the euro area. Growth was also solid in Austria and the Netherlands, but the performances of Italy, Spain, Ireland and Greece were lackluster in comparison. The rate of expansion in Italy eased from October’s three-month high and Ireland saw only modest growth. Spain fell back into contraction for the first time in nine months, while the prolonged and deep downturn in Greece continued.
By sector, investment goods producers reported the sharpest growth in output – and the steepest increase in three months – led by France, Germany and Italy. Consumer goods remained the weakest sector, despite seeing output rise at the fastest rate since August. Consumer goods production fell in Spain and Greece.
New orders rose at the fastest rate since July, with France, Germany and the Netherlands seeing the strongest gains. However, declines were seen in Italy, Spain and Greece, largely due to weak domestic demand (growth of new export orders was seen in all countries except Greece, which saw the rate of decline ease to a marginal pace).
Manufacturing employment rose for the seventh month running as the rate of job creation hit the highest since July 2007 (rising above the earlier flash estimate). Job creation remained heavily focused on Germany, the Netherlands and Austria, although France also reported an increase for the first time since April 2008. The increase in Germany was the second-highest in the survey history, but slower than the earlier flash estimate. In contrast, employment fell in Italy, Spain, Ireland and Greece.
Price pressures continued to rise in November. Input cost inflation picked up sharply to a six-month high, reflecting the higher cost of chemicals, cotton, energy, metals and wood. Costs rose at faster rates in all of the nations covered by the survey, with the steepest increases seen in the Netherlands, France and Italy.
Output prices meanwhile rose at the fastest pace of the current eight-month period of inflation, led by producer price hikes in France, the Netherlands and Germany. Greece was the only nation to report a decline in output prices.
Chris Williamson, chief economist at Markit, said: “November’s PMIs showed that manufacturing conditions picked up at greatly improved rates in Germany and France. The fact that France lagged behind Germany very slightly, despite seeing the best monthly gain in ten years, illustrates the strength of the growth surge that these two countries are currently experiencing. However, conditions are far less rosy in other parts of the Eurozone. Conditions improved at the weakest rate for nine months in Italy and stagnation was seen in Spain. While some encouragement may be gleaned from a slight upturn in Ireland, its rate of growth can only be described as modest at best and way below that needed to indicate any sort of meaningful recovery. The data highlight how domestic demand holds the key to these euro country growth divergences. Austerity measures and growing political uncertainties led to weaker domestic order book inflows, offsetting any export gains and subduing recoveries, in all cases except France and Germany. In contrast, these two largest euro member states saw a further gain in domestic order books, indicating that their recoveries have become increasingly self sustaining as manufacturing growth creates more jobs and spills over to improved consumer confidence.”