Eurozone not yet out of the woods

LONDON: The Eurozone is not yet out of the woods, but latest economic indicators suggest that its hopes for an export-led economic recovery may be coming through. The Eurozone, excepting Greece, saw stronger than estimated growth of output, new orders and new export orders in October, according to the latest Markit final manufacturing purchasing manager’s index. Led by Germany, France, Italy and Austria, the bellwether index, at 54.6, was up from an 8 month low in September.

Growth of new export orders was the fastest in three months. Rates of increase accelerated in each of the big-four economies and also in the Netherlands and Ireland. Capital goods led the recovery, though the consumer sector is still in the doldrums. Spain and Ireland also moved into positive growth territory, crossing the 50 mark, below which indicates a contraction in growth.

Chris Williamson, chief economist Markit said that the results suggest that growth picked up at the start of the fourth quarter, boosted by rising export sales. “However, it is clear that the recovery has moved down a gear. The pace of expansion has eased markedly from the surging near double-digit annual pace seen earlier in the year to a more modest 3%–4%.” In The Euro rose in early trade on Tuesday following the better than expected indicator.

Greece, manufacturing production fell at the fastest pace since June, accompanied by continuing job losses. Jobs in manufacturing rose for the sixth month running in October, with the rate of jobs growth the fastest since March 2008, mainly in Germany, Netherlands, and Austria. Spain created a few more jobs, for the first time since 2007. The index is based on a survey of 3000 manufacturing firms.