Eurozone manufacturing powers into 2018

The eurozone’s booming manufacturing sector made a strong start to 2018, as it maintained the record performance seen throughout 2017.

The IHS Markit Final Eurozone Manufacturing PMI came in at 59.6 for January, in line with the earlier ‘flash’ figure,.

That represented a three-month low and was marginally below December’s high of 60.6. But the figures still remain among the best seen since the survey began in 1997.

Chris Williamson, chief business economist at IHS Markit, said: “The eurozone’s manufacturing boom continued in full swing in January. Output grew at one of the fastest rates recorded over the survey’s near 20-year history, matched by a further near-record surge in new orders.”

The best performing country was the Netherlands, which hit a record high of 62.5. Austria and Germany posted 61.3 and 61.1 respectively, both a three-month low, while Italy’s reading of 59 was a 83-month high. Greece’s manufacturing sector continued its upward trajectory with a figure of 55.2 a 123-month high.

France recorded 58.4, Ireland 57.6 and Spain 55.2, all of which represented slight dips.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, called it a “stylish entry to 2018” but warned of capacity issues as demand continued to soar.

“The persistent momentum in activity means that employment is rising, but firms are now struggling to cope with rising demand and are hitting their capacity limits.

“Work backlogs are rising, despite firms’ effort to bring in workers, and suppliers’ delivery times are now the longest on record. As a result, both input and out put prices inflation is rising rapidly.”

The eurozone’s emerging economies also reported a strong start to the year.

Liam Carson, emerging Europe economist at Capital Economics, said the PMI data for emerging Europe provided “further evidence that the region’s economies made a strong start to the year.

“The surveys indicate that Russia’s economic recovery should resume in the coming quarters and that the Central European economies will continue to grow at a robust pace in early 2018.”

The IHS Markit Manufacturing PMI rose in Russia to 52.1 from 52 in December, the third consecutive rise. It also increased in Turkey and Hungary, was unchanged in the Czech Republic and slipped in Poland from December’s 34-month high of 55 to 54.6.