Germany steams ahead of eurozone slow coaches

17 December 2010
Growth spurt by Eurozone manufacturing PMI
Europe's productivity growth at 14-month low
Eurozone suffers retail sales slide
Eurozone growth reaches three-month high

European manufacturing hits 10-year high

17 December 2010 | Lindsay Clark

The growth gap between the eurozone economies widened in December, a survey of purchasing managers has found.

The Markit Flash Eurozone Composite Output Index, based on around 85 per cent of usual monthly PMI replies, dropped off a little from 55.5 in November to 55.0 in December.

By country, growth picked up in Germany to a pace rarely exceeded over the survey’s 13-year history, running well ahead of the eurozone average and closing the country’s best quarter of expansion since the first quarter of 2007.

Chris Williamson, chief economist at research firm Markitsaid: “The flash PMI readings for December indicate widening divergences within the eurozone. A near-record rate of growth in Germany and robust expansion in France contrast with a slowdown to near-stagnation in the other euro nations collectively.

“These growth differences can largely be explained by the failure of manufacturing-led expansion to spill over into stronger service-sector performance in the region’s periphery, as well as renewed job losses outside of the euro area’s two largest economies,” he said.

While the eurozone economy expanded by 1.7 per cent in 2010, the reliance on Germany in generating this growth was highlighted by the fact that the currency bloc’s largest national economy expanded by 1 per cent in the fourth quarter alone and 3.6 per cent in 2010, almost double the pace seen in the eurozone as a whole, Williamson added.

Manufacturers appear to be preparing for further output growth in coming months, with stocks of purchases showing only the second monthly rise seen over the past four years, as input buying rose at the fastest rate for eight months, the Markit survey found.

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