Published: Thu, February 02, 2017
Finance | By Laverne Griffith

Eurozone Manufacturing Activity Approaches Fastest Pace in Six Years

Eurozone Manufacturing Activity Approaches Fastest Pace in Six Years

United Kingdom manufacturers joined the rest of the world in making a strong start to the year, with Japan's factory growth surging to a three-year high, China's at its best level in two years, German factory output growth at its highest in three years, France's close to a six-year high, and even Italy managing to record a healthy pace of expansion.

According to the latest Markit/CIPS UK Manufacturing PMI figures, UK manufacturing Purchasing Managers Index (PMI) posted 55.9 in January, a couple of ticks below December's two-and-a-half year high of 56.1.

The decline was the second straight fall in the index, though it has stayed above the 50 mark that separates an expansion of activity from a contraction for six straight months.

U.S. manufacturing also picked up speed with a PMI of 55, the highest for two years, while the global index held steady at 52.7, indicating a modest expansion in factory output around the world. The annual rate of growth eased to 4.3% from 4.5% in December.

China's statistics bureau said last month that consumption accounted for 64.6 percent of GDP in 2016, while per capita consumption rose 8.9 percent on year to 17,111 yuan ($2,490).

Slower expansion has led to keener cost management amid ongoing inflation. Input buying increased at a solid pace and inventories declined.

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Companies also faced higher input costs, prompting them to raise their own prices further.

Lee Hopley, chief economist at EEF, the manufacturers' organisation, said the survey told "a positive story about the sector", with the all the important output and orders components remaining firmly in positive territory.

However, analysts at the research firm have raised some concerns.

Financial, insurance and Internet and software information technology were among the fastest growing service sectors, while transportation, catering and property sectors reported contractions, NBS data showed.

"Looking ahead, the trend for trade will remain challenging given so much uncertainty surrounding the global economy".

Still, the economist noted that Bank Indonesia's lower interest rates will be able to "fuel" consumer spending.

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