Eurozone Manufacturing Up as German Output Expands

The manufacturing sector is still contracting in most eurozone countries, including France, with substantial reduction in Spain, Italy and Greece.

Signs of recovery in the German manufacturing sector brought encouragement to the eurozone on Feb. 1 with the downturn in industry easing, a key survey said.

A detailed reading on the seasonally-adjusted eurozone manufacturing Purchasing Managers' Index (PMI), produced by Markit, rose for the second month running in January.

The index hit a five-month high of 48.8, still below the 50.0 mark that indicates expansion in activity, although higher than first estimated -- thanks to Germany's climb to 51.0 and neighboring Austria rising even higher.

Rates of contraction also eased in Italy, Spain and the Netherlands.

"Euro area manufacturing has started 2012 surprisingly well, suggesting the region may avoid a slide back into recession," said Markit chief economist Chris Williamson.

However, IHS Global Insight's Howard Archer, also London-based, said business conditions remained "challenging."

The manufacturing sector "is still contracting in most countries, including France. And the rate of contraction remains substantial in Spain, Italy and, particularly, Greece," he noted.

Copyright Agence France-Presse, 2012

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