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Eurozone Manufacturing Picks Up Slightly

Dec. 3, 2012
Although improved, the downturn clearly remains severe, with the eurozone stuck in recession.

BRUSSELS -- The eurozone manufacturing sector showed signs of a slight improvement in November but overall remained stuck deep in the doldrums for a 16th month running.

The Purchasing Managers Index (PMI), a leading indicator compiled by the Markit research firm, put the eurozone manufacturing sector on 46.2 points, unchanged from its initial estimate but up from 45.4 points for October.

Markit said the 46.2 November reading was the best for eight months but it remained below the boom-bust line of 50 for a 16th consecutive month, highlighting the damage done by the eurozone debt crisis to growth and jobs.

Markit chief economist Chris Williamson noted the improvement but said "the downturn clearly remains severe," with the eurozone stuck in recession.

"The ongoing steep pace of manufacturing decline suggests that the region’s recession will have deepened in the final quarter of the year, extending into a third successive quarter," Williamson said.

The three months to December are likely to see the economy contract by more than the 0.1% decline recorded for the third quarter, he added.

Williamson said the outlook was more positive, with manufacturing having hit bottom in July and recovering export demand in the United States and Asia likely to provide some support.

The eurozone debt crisis however means business confidence "remains fragile ... (and) any robust recovery still looks a long way off and prone to a setback if the crisis worsens."

Markit said rates of decline eased for Germany, the bloc's biggest economy, to put it on 46.8 points. France similarly improved, at 44.5 points, while Spain hit a 15-month high of 45.3 points.

Austria on 49.3 points, Italy 45.1 points and the Netherlands with 48.2 saw their downturns accelerate.

Ireland on 52.4 points, a four-month high, was the only country in positive territory.

Analysts recognized the improvement in the PMI data but cautioned against reading too much into it.

Howard Archer of IHS Global Insight said that while the PMI survey was "better than expected," it does not look as though manufacturing will provide a growth lead for the fourth quarter.

"Disappointingly, manufacturing employment fell for a fourth month running and at an increased rate, which fuels concern that the labor market could be losing some of its recent surprising but impressive strength," Archer said.

Copyright Agence France-Presse, 2012

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