The eurozone manufacturing sector purchasing managers' index rose to a seasonally adjusted 51.9 in January from 51.4 the previous month, NTC Research, which produces the index, said Tuesday. The latest reading outstripped market expectations of 51.7. It was the second consecutive rise in the PMI and indicated the strongest monthly improvement since October, but the pace was subdued compared with that seen much of last year, NTC Research said. A reading above 50 indicates that the manufacturing sector is generally expanding, while a reading below 50 suggests that it is generally contracting.
Economists said the January index reading suggested continuing moderate growth in the industrial sector. "This suggests industrial output should continue to expand at a moderate pace over the coming months," said Christoph Weil of Commerzbank. Florence Beranger of Ixis said; "The manufacturing PMIs suggest that industrial activity is not slowing down any more but a recovery will take time as the sector remains handicapped by high energy costs, a strong euro and of course, competition from low labor costs countries." But Weil said exports were holding up well despite the euro's appreciation, and domestic demand should also eventually gather momentum.