Rolls-Royce factory in Germany Copyright Adam Berry, Getty Images

Global Demand Lifts Euro-Area Factory Growth to a Record Pace

New orders rose the most in 17 years in December, with export demand at, or close to, record levels in a number of countries.

Euro-area manufacturing activity rose by a record in December, capping a solid year that saw industry benefit from an improving global economy.

IHS Markit's monthly factory index jumped to 60.6 from 60.1 in November, the strongest since the survey began in 1997. The reading, in line with a flash estimate, is well above the 50 level that divides expansion from contraction.

The performance in December wasn't merely a flash in the pan, with the average reading for 2017 also hitting a series high.

The figures show how the euro-region economy is profiting from buoyant global demand. Markit said new orders rose the most in 17 years in December, with export demand at, or close to, record levels in a number of countries.

Optimism among euro-area manufacturers rose to its highest level since at least 2012, and Markit noted the “encouraging” pickup being recorded for producers of investment goods such as plant and machinery.

“Higher investment should help boost productivity and profits, and therefore enhance the sustainability of the upturn,” said Chief Business Economist Chris Williamson.

The European Central Bank has noted the economic improvements and raised its growth forecasts this month. It estimates 2.4% expansion in 2017 -- which would be the best in a decade -- and 2.3% this year. Even with inflation below its target, the brighter backdrop means the ECB is about to scale back its monthly bond buying for a second time.

By Fergal O'Brien

TAGS: Supply Chain
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