The recovery in the eurozone manufacturing sector accelerated again in November. Although the pace of expansion remained modest overall, the real positives were that growth extended into a fifth successive month with the rate of increase hitting a near two-and-half year high.
The seasonally adjusted Markit Eurozone Manufacturing PMI® posted 51.6 in November, up from 51.3 in October and the earlier flash estimate
of 51.5. The headline PMI is currently at its highest level since June 2011. The average reading so far in the final quarter (51.5) also places the sector on course to register its best quarterly performance since the second quarter of 2011.
Levels of manufacturing production, new orders and new export business all rose for the fifth consecutive month. The rates of growth in output and new work both accelerated slightly to the highest since August, while the pace of increase in non-domestic orders reached a two-and-a-half year record.
PMIs for Germany, Italy, the Netherlands, Austria and Ireland all signalled expansion in November, with the rates of increase accelerating in all bar Ireland. These five nations benefited from concurrent growth of output, new orders and improved inflows of new export business.
There was also relatively positive news for Greece, where manufacturing output rose for the first time in over four years and new orders stabilised. France, meanwhile, slipped to the bottom of the PMI league table and was the only nation to report faster declines in both output and new orders. Spain fell back into contraction, as its weak domestic market offset improved inflows of new export business.
Backlogs of work at eurozone manufacturers expanded for the third time in the past four months in November. Although the pace of increase in work-in-hand was only marginal, it was still the steepest since May 2011. Taken together with the gain in new orders received, this indicated that overall order books were also improving – mainly in nations such as Germany, the Netherlands and Austria.
Rising levels of production and fuller order books failed to alter the trend in employment, however, with job cuts reported for the twenty-second month running. Germany, France and Spain all reported faster rates of decline. Further cuts were also seen in Greece (albeit the least severe reduction in almost four years), while Austria registered a decrease following a slight increase in October.
Average purchase prices rose for the third successive month in November, and at the fastest pace since October 2012. However, the rate of increase remained moderate compared with its long-run survey average. Input cost inflation was steepest in France and Italy. Adding to the evidence of rising input price inflation was the trend in average supplier lead times, which lengthened to the greatest extent in nearly two-and-a-half years.
The pass-through of higher input prices at the factory gate remained minor, however, as output prices rose only marginally again. The sharpest increases in output charges were centred on the stronger-performing manufacturing sectors – Germany, the Netherlands, Austria and Ireland.
Lower output reflected a further drop in new orders received by French manufacturers. The latest fall in new work was the most marked in six months. Data suggested weak demand both domestically and abroad; new export orders were down for the first time in three months.
Outstanding business fell for the fourth month running, with the rate of decline accelerating to the fastest since May.