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September growth ends Eurozone manufacturing recession

01 October, 2013

The Eurozone manufacturing sector expanded for the third straight month in September, maintaining its third-quarter growth and lifting the sector out of its long-running recession.

According to the seasonally adjusted Markit Eurozone manufacturing PMI (Purchasing Managers’ Index), levels of production and new orders both rose for the third consecutive month, as domestic market conditions stabilised and foreign demand continued to improve. However, rates of expansion in output, new orders and new export orders were all slightly slower than August’s 27-month peaks. Growth of new export business was nevertheless reported by all nations, except Greece.

The Netherlands stayed at the top of the growth league table in September, with its PMI hitting a near two-and-a-half year high. Growth also accelerated in Ireland.

Expansions were recorded in Austria, Germany, Spain and Italy, although growth rates in these nations fell short of the modest peaks reached in the previous month.

France moved closer to stabilising with its PMI hitting a 19-month high in September, just short of the neutral 50.0 mark. Greece remained at the bottom of the PMI league table, a position it has held in all except two months during the past three-and-a-half years.

The labour market remained the weak link in the Eurozone manufacturing recovery, although signs of possible stabilisation were evident. Although job losses occurred for the twentieth successive month, the rate of decline was only marginal and among the weakest during that sequence.

“An improvement in Eurozone manufacturing business conditions for a third straight month in September sends a reassuring signal that the sector is providing an all-important lift for a region that has been besieged by recession,” comments Chris Williamson, chief economist at the survey compiler, Markit.

“Even manufacturers in the region’s periphery are reporting better demand for their goods,” he adds. “Orders rose for the fourth month running in Spain and for the third successive month in Italy and Ireland. In the region’s ‘core’, orders likewise rose for a third month running in Germany and the Netherlands and even the recent laggard France saw the first upturn in demand for just over two years.  

“This is good news for the Eurozone, but also for the global economy,” Williamson says. “The downturn in demand caused by the region’s recession and the uncertainty generated by its debt crisis had cast a shadow over economic recoveries across the globe, from nearby neighbours such as the UK to distant emerging markets such as China.

“But we must not get too carried away,” he cautions. “Although signalling the best performance for over two years in recent months, the PMI slipped slightly compared with August and remains only just above the 50 ‘no change’ level, indicating that this is still early days in what looks like a fragile recovery.”

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