European Manufacturers Had a Jolly Good November
European manufacturers were able to post slight gains in the month of November, Reuters reports. According to the results of the Purchasing Managers’ Index, released by Markit, the value for the eurozone came in at 51.6 for this November, rising from 51.3 in October and also slightly beating out the flash estimate published two weeks ago. Since values above 50 indicate growth rather than contraction, this means that the manufacturing sector is posted a reasonable rate of expansion. Posting the highest value since mid-2011, the region is on pace to have its best quarter in over two years.
Leading the way were countries such as the Netherlands and Austria, while the region’s largest economy, Germany, also finished with a strong showing. Germany’s value of 52.7 is its highest in almost two and a half years, meaning that its manufacturers are continuing to grow as demand for products from the country — both domestic and international — continues to pick up. Even Greece, which is still contracting with a value of 49.2, can take away something good from the data; its value was the highest the country has seen in over four years.
Meanwhile, the picture was not so rosy for France, where a 48.4 statistic has caused some to worry that the country’s manufacturers are losing ground to others throughout the eurozone. As the economic picture in France continues to diverge from that of Germany, many are wondering what actions the country can take to remedy the situation. With low economic growth projected over the coming years and a burdensome public sector that has shown no signs of shrinking, the country’s obligations have tied up many of its resources.
One section of the report sure to catch the eye of many policymakers throughout the region is the portion on prices. With inflation rates remaining low throughout the eurozone at under 1 percent for the past two months, an increase in manufacturing activity — and thus, in prices — could serve as one way to combat low inflation rates. However, even though input prices have risen slightly, there is yet to be any meaningful real upswing in output prices.
The report also discussed employment rates in the sector, which have continued to fall throughout the region, but especially in some of the area’s weaker economies, such as Greece and Spain. Falling employment compounds the problem of high unemployment by implying that, not only are lots of people out of work, but fewer people are able to keep their jobs as well.
“The November manufacturing PMI surveys bring good news on the whole, but suggest there’s still a lot to worry about in terms of the health of the eurozone economy,” said Chris Williamson, Markit’s chief economist. “Any substantial improvement to the region’s unemployment situation still seems frustratingly far off,” he remarked, adding that he was concerned about the performance of many southern European countries.