Manufacturing activity in the 13 nations that share the euro held steady in April although the European currency's recent strength took its toll on exports, according to a widely watched survey on May 2.
The eurozone's seasonally adjusted purchasing managers' index (PMI), compiled by NTC Research, was flat in April at 55.4 points compared to March, in line with private economists' expectations for 55.5 points.
A reading above 50 indicates that the manufacturing sector is generally expanding, while a reading below 50 suggests that it is generally contracting.
"Despite the strong euro, the manufacturing sector is growing at a steady clip in the eurozone," said Bank of America economist Holger Schmieding. "Judging by the monthly survey of purchasing managers, an improved outlook for employment at home is offsetting a decline in export orders," he added.
As the euro rose to reach all-time highs against the dollar and the yen, new export orders grew at the slowest pace since August 2005, weighing on overall new orders which saw the weakest monthly rise in 15 months. However, manufacturers kept taking on more workers to boost capacity, pushing the rate of job creation to the highest level in six and a half years.
"As an economic upswing matures, growth typically shifts from exports and business investment, which are both heavily focused on manufacturing, to more service-oriented private consumption," said Schmieding. "The PMI report suggests that the eurozone is starting this transition," he added.
Job growth in the manufacturing sector has helped push unemployment lower across the eurozone, where the jobless rate fell in March to a record low of 7.2%, according to data released May 2 by the EU's Eurostat data agency.
Copyright Agence France-Presse, 2007