The euro zone manufacturing sector grew for the second consecutive month and at a faster rate than expected but the divergence between Spain and the rest of the big four economies widened, a survey showed today.
The Markit Eurozone Manufacturing Purchasing Managers Index for November rose to 51.2 from 50.7 in October, inching above the flash estimate of 51.0 released earlier in the month.
This is the second month running the reading came in above the 50.0 mark that divides growth from contraction and is the highest level since March 2008, but markets were little moved on the data.
"The key thing is that it is clearly still trending upwards which is encouraging but the pace of increase has recently slowed which might indicate that the industrial recovery is losing a little bit of momentum," said Ben May at Capital Economics.
The euro zone new orders index edged up to to 53.8 from 53.7 in October, marking its highest level since August 2007, while output was at a high not seen for over two years.
The upturn was driven by a strong rebound in Germany - where the sector expanded at its fastest rate since June 2008 - as well as France and Italy. But it was a different story in Spain where the rate of contraction accelerated.
"The rebound continued to be led by Germany and France but is broadening to other euro area nations, with the notable exception of the deepening recession in Spain," said Rob Dobson at data provider Markit.
"Looking ahead, the coordination of monetary policy will be complicated if Spain continues to lag the region as a whole." The European Central Bank has slashed interest rates to 1.0 per cent and adopted a loose monetary policy in a bid to drag the economy out of recession.
Figures due on Thursday expected to confirm the region's economy returned to modest growth in the third quarter, having contracted for the previous five consecutive quarters.
Data released yesterday showed prices rose 0.6 per cent year-on-year in November, still well below the central bank's two percent target ceiling, giving the ECB scant reason to think about raising rates when it meets on Thursday or anytime soon.
Unemployment will also be a concern for the central bank and the PMI employment index indicated firms slashed jobs at a faster pace in November than the month before.
Reuters