Eurozone manufacturing PMI hits six-year high, UK expands at highest rate in three years

LONDON (ICIS)–The eurozone’s manufacturing purchasing managers’ index (PMI) reached a six-year high in April, recording a score of 56.7, up from the 56.2 achieved in March, according to analysts at IHS Markit on Tuesday.

The increase resulted from output, new orders and employment all rising at the quickest rates in six years, IHS added.

An earlier flash estimate from IHS, calculated based on approximately 85% of replies, had suggested that the April PMI would be 56.8.

A reading above 50.0 points indicates economic expansion, while a reading below that mark would show contraction.

Despite a slight month-on-month slowdown, Germany continued to be the strongest performer, recording a manufacturing PMI of 58.2, down from 58.3 in March. This was down to slightly weaker growth rates for output, new orders and employment as well as a contraction in stocks of purchases.

France, meanwhile, the eurozone’s second-largest economy, continued the resurgence seen in recent months by jumping from 53.3 in March to 55.1 in April as business conditions were buoyed by a marked rise in new order intakes.

The third-largest economy within the eurozone, Italy, also posted a notable improvement in March, increasing from 55.7 points to 56.2 in April, a 73-month high.

Commenting on the data, Chris Williamson, chief business economist at IHS Markit said: “Eurozone manufactuers reported buoyant business conditions in April, signalling an encouragingly solid start to the second quarter.

“Production, order books and exports all grew at the fastest rates for six years, fuelling one of the largest increases in factory jobs in the 20-year history of the survey.”

Williamson continued to say that companies are benefiting from the historically weak euro as well as ongoing central bank stimulus including record-low interest rates.

Outside of the eurozone, but within the EU, the UK’s manufacturing PMI posted its highest reading in three years of 57.3, a sharp rise from the 54.2 recorded in March, as output and new orders expanded at faster rates.

“The UK manufacturing sector made a solid start to the second quarter,” said Rob Dobson, senior economist at IHS Markit.

“Growth of output, new orders and employment all gathered pace, driven higher by the continued strength of the domestic market.”