European manufacturing hits 10-year high

23 April 2010

23 April 2010 | Nick Martindale

Manufacturing in the eurozone expanded at the fastest rate in almost a decade this month, according to initial results from the monthly survey of purchasing managers.

Markit’s eurozone manufacturing output index rose from 59.8 in March to 61.3 in April, its highest level since June 2000. A score of 50 represents no change.

The purchasing managers’ index (PMI) – a composite of new orders, output, employment, delivery times and materials purchased – was 57.5, up from 56.6 in March, the highest point since June 2006.

Activity picked up as a result of the weaker euro, which fell on the back of fears over Greece’s public finances and rising demand from emerging economies.

German manufacturers led the way, increasing production at the fastest rate since 1996.

The survey also suggested output would continue to increase in the months ahead, with the orders to finished goods ratio at a near-record level and the largest backlog of work recorded since 2007.

The services sector recorded the fastest rate of growth and biggest influx of new business since 2007.

The services business activity index rose from 54.1 in March to 55.5 in April, taking it to a 30-month high, while the overall composite index increased to 57.3 from 55.9, its highest level for 32 months.

Chris Williamson, chief economist at Markit, said: “The eurozone recovery remains firmly on track as we move into Q2, with the PMI data soaring above expectations and challenging the pessimistic-looking consensus forecast of a 0.4 per cent rise in GDP.

“Manufacturers are showing the best performance for 10 years, with the PMI signalling near double-digit annual growth, and the recovery is also gaining momentum in services.

“Job losses have almost halted as a result, but an unwelcome side-effect is a sharp increase in inflationary pressures, particularly in manufacturing.”

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