Manufacturing activity in the eurozone rose slightly more than initially thought in December while remaining under pressure from the credit crunch and the strong euro, figures released Jan. 2 showed. The eurozone's seasonally adjusted purchasing managers' index (PMI), compiled by NTC Research, stood at 52.6 in December.
A reading above 50 indicates expansion in the sector but the figures for the end of 2007 were markedly below the levels seen mid-year.
Although the euro's ascent has helped soften the blow of soaring, dollar-denominated oil prices, it is pinching European exporters by making their products less competitive on international markets. High oil prices and the shaky credit markets are also having an effect. "The marginal upward revision in the Eurozone December manufacturing purchasing managers' index does not disguise the fact that the sector ended 2007 under significant pressure from the credit crunch, strong euro, elevated oil prices, higher interest rates and softening growth in some key export markets," said Global Insight's chief European economist Howard Archer.
New orders growth was particularly modest in December at 51.7, down from the previous month's 52.8.
The loss of momentum in the Eurozone manufacturing sector reinforces the case for the European Central Bank to hold off from raising interest rates again, argued Archer.
Germany slipped to second-place in the growth rankings behind France in December. France -- unlike Germany, Italy or Spain -- recorded a higher PMI than in November, registering the strongest pace of expansion for six months.
Copyright Agence France-Presse, 2008