Tuesday, January 4, 2011

Euro Zone Manufacturing PMI Rises More-than-expected

Forex Pros – Manufacturing activity in the euro zone increased more than initially forecast in December, rising to an 8-month high, industry data showed on Monday.

In a report, market research group Markit said that its euro zone manufacturing PMI rose to a seasonally adjusted 57.1 in December, compared to a preliminary reading of 56.8.

Analysts had expected the manufacturing PMI to rise to 56.9 in December.

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

According to the data, the level of the PMI has remained above the neutral 50.0 mark for 15 months in a row.

Commenting on the report, Chris Williamson, chief economist at Markit said, "Germany remained the star performer, seeing near-record growth, followed by France, where the PMI slipped only slightly from November's ten-year peak. However, welcome signs of recoveries were also evident in the periphery, where export sales helped boost output growth in all cases except Greece, where the rate of decline at least moderated."

He added, "The data suggests that the manufacturing recovery may be broadening out to help lift economic growth outside of the French-German core in early 2011."

Following the release of the data, the euro was down against the U.S. dollar, with EUR/USD tumbling 0.62% to hit 1.3306.

Meanwhile, European stock markets were broadly higher. The EURO STOXX 50 climbed 0.66%, France's CAC 40 jumped 1.39%, Germany's DAX surged 0.87%, while the FTSE 100 was closed due to the New Year's holiday.

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