Photographer: Martin Leissl/Bloomberg

Euro-Area Manufacturing Quickens as Germany Leads Uneven Growth

  • PMI increased to 52.6 in September from 51.7 in August
  • Stronger demand seen from domestic, international customers

Manufacturing in the euro area accelerated in September as incoming new business grew at the fastest pace in three months.

A Purchasing Managers Index for manufacturing rose to 52.6 from 51.7 in August, in line with earlier estimate, IHS Markit said on Monday. The expansion was driven by stronger demand from both domestic and international customers, the London-based company said in a statement.

While the report indicates a rebound in confidence after a third quarter marked by political uncertainty and signs of a slowdown, the improvement remains patchy. Headwinds include slumping demand and the fallout from the U.K.’s decision to leave the European Union, as well as concern that European Central Bank stimulus is reaching the limit of its effectiveness.

“Production gains are being driven by welcome signs of improving demand from both within the region and from wider export markets,” said Chris Williamson, chief business economist at IHS Markit. “The concern is that the upturn is worryingly uneven, reliant on a ‘core’ centered on Germany and its neighbors.”

Germany’s manufacturing PMI rose to a 3-month high, and the second-best reading in two-and-a-half years, Markit said. Strong performances were also seen in the Netherlands and Austria. Spain, Italy, and Ireland registered weaker growth, while manufacturing in France continued to decline and Greece slipped into contraction.

ECB President Mario Draghi last week renewed his plea to governments to use the current ultra-loose monetary policy as an opportunity to deliver structural reforms and help create a sustainable recovery.

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