The Urethane Blog

European Manufacturing Improves

Eurozone October manufacturing PMI hits 33-month high

02 November 2016 13:39 Source:ICIS News

Iran plans to increase its petrochemical capacity to 100m tonnes/year by 2015LONDON (ICIS)–The eurozone’s manufacturing sector expanded again in October, posting a purchasing managers’ index (PMI) of 53.5, a 33-month high, according to official data published by research group Markit on Wednesday.

The October PMI was 0.9 points higher than September’s reading of 52.6 and 0.2 points above the earlier flash estimate of 53.3.

The Netherlands was the eurozone’s top performer with growth rising to a 15-month-high at 55.7. Germany also posted its best result in almost three years at 55.0. A PMI score of above 50.0 indicates expansion.

Austria (53.9), Spain (53.3) and Ireland (52.1) saw solid rates of manufacturing growth while France moved back into expansion territory at 51.8, a 31-month high.

Italy posted a moderate expansion of 50.9, albeit at a slower rate than September, while Greece contracted (48.6) for the second month in a row.

According to Markit, the improvement seen in October was due to “the sharpest expansion of production since April 2014 and the second quickest increase of total new orders over the same period”.

Rob Dobson, senior economist at Markit said: “Output, new orders and new export business all rose at some of the fastest rates achieved over the past three years, building on the solid increases in quarter three and underpinning the steepest jobs growth since mid-2011.

“The broad base of the growth acceleration signalled by the headline PMI was especially pleasing. Five out of the eight nations covered saw faster expansions during October, including some of the key larger growth engines such as Germany, the Netherlands and Spain.

“On the price front, inflationary pressures in the manufacturing sector showed further signs of recovery. Input costs rose at the quickest clip in 15 months on the back of increased commodity prices, especially for energy and oil-related products.

“These cost pressures may be starting to trickle further along the supply chain, as firming demand allowed manufacturers to raise output charges in October for the first time since August last year.”

Elsewhere, the UK’s construction sector expanded for the second month in October with PMI showing moderate growth at 52.6 from September’s reading of 52.3.

“Construction growth was dependent on a solid recovery in residential work, as civil engineering and commercial building struggled for momentum in October,” said Tim Moore, senior economics at IHS Markit.

A PMI reading above 50 indicates an expansion in manufacturing activities, while a reading below 50 denotes a contraction.

By Niall Swan