Eurozone Private Sector Growth Strongest Thus Far This Year
October 24 2016 - 4:33AM
RTTF2
Eurozone private sector expanded at the fastest pace thus far
this year, led by a strong rebound in Germany, while the pace of
growth eased in France.
The Composite Output Index, which combines manufacturing and
services, rose to 53.7 from 52.6 in September, preliminary results
of the purchasing managers' survey by IHS Markit showed Monday.
The outcome exceeded the 52.8 score economists had predicted. A
reading above 50 suggests expansion in the private sector.
The Services Purchasing Managers' Index, or PMI, climbed to a
nine-month high of 53.5 from 52.2 in September. Economists had
forecast a score of 52.4.
The Manufacturing PMI increased to a 30-month high of 53.3 from
52.6 in September. Economists were looking for a score of 52.7.
The manufacturing output index rose to ten-month high of 54.4
from 53.8 in September.
"Many of the uncertainties plaguing the Eurozone economy may
have faded somewhat, but concerns about geopolitical risks,
instability in the financial sector and monetary policy are far
from likely to fade into the background permanently," ING Bank
economist Bert Colijn said.
"A strong October therefore does not yet mean a strong Q4, but
at least it's a good start."
The fastest new order growth since January, led to the biggest
gain in employment in three months. However, backlogs of work
accumulated at the fastest rate since May 2011 as many firms
struggled to keep pace with demand.
Average input costs increased at the steepest rate for 15
months, driven by higher commodity prices, notably oil-related, as
well as rising wage costs.
Consequently, output prices rose for the first time since August
2015 as companies tried to pass on the increased costs to
customers.
In Germany, private sector growth recovered sharply to a
three-month high in October, on the back of a strong rebound in the
service sector and faster expansion in manufacturing.
The flash Germany Composite PMI rose to 55.1 from a 16-month low
of 52.8 in September. The Services PMI also climbed to a
three-month high of 54.1 from 50.9 in September. Economists had
forecast a score of 51.8.
The flash Manufacturing PMI rose to a thirty-three month high of
55.1 from 54.3 in September. Economists had expected the reading to
hold steady. The Manufacturing Output Index increased to a
three-month high of 56.9 from 56.4 in September.
Meanwhile, French private sector growth slowed in October as a
rebound in manufacturing failed to offset the weaker expansion in
services. The flash France Composite PMI fell to a two-month low of
52.2 from a 15-month peak of 52.7 in September.
The manufacturing PMI rose to a ten-month high of 51.3 from 49.7
in September as manufacturers raised production to the greatest
degree since March 2014. The manufacturing output index climbed to
a 31-month high of 52.5 from 50.2 in September.
Meanwhile, the flash Services PMI dropped to a three-month high
of 52.1 from 53.3 in September.
"The eurozone economy showed renewed signs of life at the start
of the fourth quarter, enjoying its strongest expansion so far this
year with the promise of more to come," IHS Markit economist Chris
Williamson said.
"Policymakers will be encouraged by signs of both stronger
economic growth and rising price pressures, and the prospect of a
robust fourth quarter will fuel further speculation of a possible
tapering of QE purchases by the ECB."
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