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Eurozone manufacturing sector reaches another record for employment

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Here’s why

The Eurozone manufacturing sector has increased employment at a record high, thanks to continued strong growth in output and new orders.

The latest IHS Markit Manufacturing Purchasing Managers’ Index (PMI) came in at a strong 58.1 in September 2017, with growth reported cross all countries included in the survey.

Nearly seven-year highs
Eurozone manufacturing is at its best for more than six and a half years. Germany is back at the top of the table, with its own six and a half year personal best. The Netherlands has also seen strong performance, in second place and marking its own six and a half year record. France and Greece also had their best performance for nearly six and a half years, with activity picking up for both countries.

Production grew at the fastest rate for almost six and a half years as new business saw strong growth. New orders were close to the six-year highs posted in June 2017.

More orders, more jobs
The need for increased capacity following substantial growth in new business means more jobs for the industry, growing the fastest since the survey started in June 1997. Capacity has been stretched and alongside increased demand for raw materials, this has led to longer vendor lead times.

Costs also up
Input costs are on the up. Purchase price inflation has grown to the highest for five months. Selling prices have risen accordingly – at the quickest for nearly six months – now rising for a year – and counting…

Optimistic outlook
Overall positivity as at the second highest recorded for five years, just behind the optimism seen in June when the Eurozone sector broke all the records. All manufacturers surveyed anticipate a continued improvement in the sector and further growth over the coming year.

Commenting on the latest index, David Johnson, founding director at Halo Financial, said, “It’s reassuring to see recovery in the manufacturing sector across the Eurozone, particularly after poor performance in Greece and France seen in recent surveys.

“While inflationary pressures are once again making their presence felt, both output and optimism are high – this has already boosted the Euro, which, among other things, is struggling with the effects of political unrest in Spain.

“This strong industrial performance will add fuel to the fire for the European Central Bank (ECB) monetary stimulus debate and could put pressure on the ECB to take steps to wind down quantitative easing sooner, rather than later. One caveat, though is that, across all sectors, Eurozone unemployment is still at 9.1 per cent. That’s an improvement on 9.9 per cent a year ago, but still a worrying level by any measure.”

Atul Kariya, manufacturing sector head at accountancy firm MHA MacIntyre Hudson, commented, “Eurozone manufacturers are flying high once again. This will be viewed as a strong indicator of economic recovery for the Eurozone and the ECB will no doubt be taking note. However, current political uncertainty in several Eurozone countries could still yet take the shine off these results for international markets and investors.”

Neil Lloyd, sales director at law firm, FBC Manby Bowdler, observed: “The Eurozone manufacturers just keep on delivering. Stronger output, new orders and record job creation have all contributed to what is a 79-month high for the Eurozone Manufacturing PMI and continued expansion for the 51st month in succession.

“With companies expecting economic conditions to improve and rising demand to continue over the next 12 months, it seems the sector can’t be faulted for their positive outlook and improved optimism.”

Manufacturing PMI country rankings– September 2017 

Country

 

PMI Performance
Germany 60.6 77 month high
Netherlands 60.0 79 month high
Austria 59.4 4 month low
Italy 56.3 Unchanged
France 56.1 77 month high
Ireland 55.4 2 month low
Spain 54.3 3 month high
Greece 52.8 111 month high



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