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Eurozone manufacturing stays close to record high in January

Staff Writer | February 2, 2018
The eurozone manufacturing sector made a strong start to 2018. Although January saw rates of growth in output and new orders ease from near-record highs at the end of last year, they remained among the best seen since the survey began in 1997.
Eurozone manufacturing
Eurozone   IHS Markit Eurozone Manufacturing PMI
The final IHS Markit Eurozone Manufacturing PMI posted a three-month low of 59.6 in January, down from December’s record high of 60.6 and identical to the earlier flash estimate.

The PMI has signalled expansion in each of the past 55 months.

Sector data signalled solid growth across the consumer, intermediate and investment goods categories, with the steepest rates of expansion in the latter two.

This was despite consumer goods being the only category to see growth accelerate during the latest survey month.

The Netherlands PMI rose to a series-record high in January, taking it to the top of the euro area rankings.

Italy also saw growth improve, to an 83- month high, while the Greek PMI moved to its highest level in over a decade.

Although rates of expansion eased in the other nations covered by the survey, PMI readings remained close to record highs in Germany, Austria and Ireland, and among the best for 17 and ten years in France and Spain respectively.

The robust improvement in eurozone manufacturing operating conditions signalled by continued strong expansions of both production and new orders had a positive impact on business confidence.

January saw optimism rise to a series-record high, with confidence improving in all nations bar Germany and Austria (although these nations maintained strongly positive outlooks overall).

Companies indicated that they were experiencing solid inflows of new business from both the domestic and export markets during January.

The level of new export orders rose at a robust pace, albeit a threemonth low.

Growth of new export business remained solid across the nations covered by the survey, with Spain, Ireland and Greece seeing sharper increases than those registered at the end of 2017.

Euro area manufacturing employment rose for the forty-first successive month in January.

The rate of jobs growth remained substantial and close to the survey record highs achieved in November and December of last year.

Solid increases in staffing levels were seen across the nations covered by the survey, with the steepest rises in the Netherlands, Austria and Germany.

Rates of expansions strengthened in Italy, the Netherlands and Greece.

Higher staff headcounts reflected improved inflows of new orders, rising business confidence and efforts to increase capacity in light of increasing backlogs of work.

Outstanding business rose for the thirty-third consecutive month, with the pace of expansion only slightly slower than November’s record high.

Inflationary pressures picked up at the start of 2018, with both output charges and input prices rising at faster rates.

Output price inflation accelerated to an 80-month high.

Purchasing costs rose to the greatest extent in over six-and-a-half years, reflecting higher commodity prices (including oil) and greater pricing power at vendors.

The latter factor was the result of shortages developing for some inputs as demand outstripped supply.

This also led to one of the sharpest lengthening of supplier lead times on record.