The eurozone manufacturing purchasing managers’ index (PMI) surged to a 32-month high of 54 during January, from 52.7 the previous month, as factories took new orders, prompting them to take on new employees for the first time in two years.
The increase was led by a sharp pick-up in Germany, while the Greek PMI returned to growth for the first time since August 2009.
A revival in the eurozone’s peripheral countries was also noted, with Spain’s PMI rising to a 45-month high. The data is consistent with first-quarter GDP growth of 0.4 to 0.5 per cent.
In the meantime, the US Institute for Supply Management (ISM) reported a slower increase in factory output in January, as factories refrained from adding to inventories and unusually cold weather slowed activity. Weakness abroad was also a factor that muffled output.
During January, the ISM index of manufacturing fell sharply to 51.3 from 56.5 the previous month. This is the biggest one-month decline since May 2011.
Recent economic reports, such as the jobs report and retail sales, have raised concerns that the US economy may have lost some of its earlier momentum. However, according to the Federal Reserve, the broader outlook for the US economy remains positive, saying in a recent statement that it has shown “growing underlying strength”.
Finally, the UK Office for National Statistics said industrial production grew 0.4 per cent in December compared with November. Economists were expecting output to grow by 0.6 per cent after falling 0.1 per cent in November.
During the same month, manufacturing output grew by 0.3 per cent month-on-month, offsetting the 0.1 per cent drop in November. It was also forecast to rise by 0.6 percent. On a year-on-year basis, growth in industrial production slowed to 1.8 per cent from 2.1 per cent. Similarly, manufacturing output growth eased to 1.5 per cent from 2.2 per cent.
This latest data suggest that manufacturing growth will steady rather than run away this year.
Separately, during January, UK services grew at the slowest rate in seven months.
This article was compiled by Bank of Valletta for general information purposes only.