1 December 2010 | Angeline Albert    

Strong growth in the manufacturing sector in Germany and France contrasted with contractions in Spain and Greece, the latest Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) found.

The PMI rose to a four-month high of 55.3 in November across the zone (above the 50 no change mark), up from 54.6 in October, just shy of the flash prediction last week. 

Manufacturing production rose for the 16th month running and at the fastest pace since August, with France and Germany leading the recovery. The PMI hit a three-month high in Germany and a 10-year high in France on the back of marked growth in output and new orders.

Growth was also solid in Austria, but not as strong as in previous months. Growth was good in the Netherlands also. The performance of Italy, Spain, Ireland and Greece were weak in comparison.

Rates of expansion accelerated for output and new orders in November, but were well below the highs seen in the first half of 2010.  New orders rose at the fastest rate since July, with France, Germany and the Netherlands seeing the strongest gains, but Italy, Spain and Greece seeing declines, as a result of weak domestic demand. Investment goods producers reported the sharpest growth in output, while consumer goods remained the weakest sector.

Manufacturing employment rose for the seventh month running and the rate of job creation was at its highest since July 2007.

Chris Williamson, chief economist at Markit, said: “The fact that France lagged behind Germany very slightly, despite seeing the best monthly gain in 10 years, illustrates the strength of the growth surge that these two countries are currently experiencing.

“Conditions are far less rosy in other parts of the Eurozone. 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.”

The PMI is based on survey data from around 3,000 manufacturing firms.

Meanwhile, UK manufacturing operating conditions showed a marked improvement in November. The seasonally adjusted Markit/CIPS UK Manufacturing PMI rose to 58.0 last month - its highest level since September 1994 and up from a revised figure of 55.4 in October. The PMI has remained above the neutral 50.0 mark for 16 months running.

Employment rose at the quickest pace since the survey began in 1992, reflecting stronger growth of output and faster inflows of new work and new export orders. Staffing levels have now increased in each of the past eight months. Job creation was attributed to the ongoing economic recovery. And cost pressures rose sharply amid widespread raw material price increases.