Eurozone manufacturing PMI shows modest improvement

News Article - 05 January 2012
Category: Business

Despite activity in the Eurozone manufacturing sector falling for a fifth successive month, the Markit manufacturing PMI closed at 46.9 for December, up from November's 28-month low of 46.4.

Interestingly, financial markets in Germany, France and Italy rose as a result of the news of this increase. However, experts revealed that with UK markets closed for a public holiday and trading therefore very light, any share movements are more distinct than usual.

There remains concern for the long term security of the manufacturing sector as any Markit score under 50 represents a contraction.

Chris Williamson, Markit's chief economist, revealed the manufacturing growth in the final quarter of 2011 was in fact the weakest since the middle of 2009.

"Eurozone manufacturing is clearly undergoing another recession," he said.

"Despite the rate of decline easing slightly in December, production appears to have been collapsing across the single currency area at a quarterly rate of approximately 1.5 per cent in the final quarter of 2011."

Many key economists fear the Eurozone economy is destined for recession after growth of just 0.2 per cent in Q3 2011.

Howard Archer, of IHS Global Insight, said: "Eurozone manufacturers are now very much on the back foot and finding life extremely challenging as domestic demand is hit by tighter fiscal policy across the region, squeezed consumer purchasing power, and heightened Eurozone sovereign debt tensions leading to tightening credit conditions and financial market turmoil."

Indeed a BBC poll of leading economists, conducted prior to the turn of the New Year, saw 25 of 27 respondents predict a return to recession for the Eurozone in 2012.

In a bid to keep a lid on the crisis, the leaders of France and Germany are due to meet in the coming days to discuss new measures. French President Nicolas Sarkozy and German Chancellor Angela Merkel will convene on 9^th January in readiness for the first meeting of the European Council in 2012.

Article keywords: eurozone, manufacturing

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