Eurozone Manufacturing Posts Sharp Inflationary Pressures

Eurozone annual inflation rises to 2.4%

A key indicator of eurozone manufacturing health on Feb. 1 posted a record rise in raw materials costs with goods prices also rising at the fastest pace since the economic crisis began.

The final eurozone manufacturing purchasing managers' index produced by London-based researchers Markit hit a nine-month high of 57.3 in January, up from 57.1 in December and above the earlier flash estimate of 56.9.

It has now remained above the flat 50.0, which indicates growth, for 16 months.

But 24 hours after data showed eurozone annual inflation shooting up to 2.4%, cost inflation hit record highs in major markets Germany, Italy, Spain and Austria.

"Input prices rose at the steepest pace in the survey's history," Markit chief economist Chris Williamson said, inflation here accelerating in all 17 countries covered. These rises were largely attributed to higher prices for fuel, food and metals, notably steel and copper, and were passed on to customers with "prices charged for goods rising at the fastest rate since the crisis" began, he underlined.

While employment picked up particularly in Germany, Austria and the Netherlands, further job losses were seen in Spain and Greece and the index sank to a six-month low in France.

However, Williamson also noted a "reassuring improvement" in the currency area's under-pressure periphery, in Ireland and Italy in particular.

Copyright Agence France-Presse, 2011

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