Euro-area factory output expanded at a faster pace than initially estimated in August, driven by a resurgence in Italy and Spain, as the 17-nation currency bloc’s recovery began to build momentum.
An index based on a survey of purchasing managers in the manufacturing industry increased to a 26-month high of 51.4 from 50.3 in July, London-based Markit Economics said today. That’s above an estimate of 51.3 published on Aug. 22. A reading above 50 indicates growth.
Encouraging indicators have begun to accumulate since the euro area returned to growth in the second quarter, ending a record-long recession. Economic confidence soared to a two-year high in August. The Stoxx Europe 600 Index has risen 5 percent in the last two months, and the euro has gained 1.8 percent against the dollar.
“What’s especially encouraging is that the upturn is broad-based, with PMIs rising in all countries with the exception of France,” Chris Williamson, chief economist at Markit, said in today’s report. “Germany, the Netherlands, Austria, Spain and Italy are now all seeing manufacturing grow at the fastest rates for at least two years, and even Greece saw a marked easing in the rate of manufacturing decline.”
The euro was lower against the dollar after the data were released, trading at $1.3216 at 10:59 a.m. in Brussels, down less than 0.1 percent on the day.
In Italy, factory output accelerated in August at the fastest pace in 28 months, boosted by an increase in new orders that partly reflected a substantial growth in export sales, Markit said in a separate report.
Spanish manufacturing expanded in August for the first time in more than two years, strengthening Prime Minister Mariano Rajoy’s prediction that exports will help the economy emerge from recession this year.
“Looking ahead, the hope for manufacturers is that currently improving confidence in most euro-zone countries will encourage businesses to invest more, and also encourage consumers to spend more, particularly on durable goods,” said Howard Archer, chief European economist at IHS Global Insight in London.
Daimler AG’s Mercedes-Benz brand, the world’s third-biggest luxury carmaker, produced more vehicles than ever before in the first half to cover demand for its new compact models and sport-utility vehicles. “We are planning for further growth,” Andreas Renschler, head of manufacturing, said on Aug. 16.
The European car market, which is heading into the sixth straight year of decline, is stabilizing, Germany’s VDA automobile industry association said on Aug. 16. New car registrations in the region rose 4.8 percent in July to 1.02 million vehicles, the Berlin-based industry group said.
Yet Europe continues to struggle with the legacy of a debt crisis now in its fourth year, including a jobless rate that held at a record 12.1 percent in July. The rate among young people increased to 24 percent.
Unemployment is proving resistant to Europe’s improving fortunes, and may help to explain why economists in a Bloomberg News survey see growth slowing to 0.1 percent in the third quarter after a 0.3 percent expansion in the three months through June. Analysts forecast the jobless rate won’t drop below 12 percent through 2015.