Eurozone manufacturing output nears record highs, UK strongest since 2014

LONDON (ICIS)–Eurozone manufacturing output stood near record highs in November while the UK’s sector growth remained strong despite economic uncertainty in the country, analyst IHS Markit said on Friday.

Industrial purchasing managers’ index (PMI) data for the bloc rose to 60.1 points in November, up on earlier estimates for the month and on the 58.5 level recorded for October, the highest rating since April 2000.

The surge in manufacturing growth was broad-based across the region, with all countries covered growing for the sixth consecutive month, according to Markit. Growth was strongest in Germany at 62.5 points and weakest in Greece at 52.2.

Manufacturing sector growth for the Netherlands and Austria also stood at above 60.0. A PMI score of above 50.0 indicates economic growth.

The extent of the growth and the increase in order backlogs is shifting the economy to a sellers’ market, providing scope for increasing prices, according to Markit chief economist Chris Williamson.

“Given the surge in demand for inputs caused by the production growth spurt, it’s not surprising that recent months have seen some of the most severe supply chain bottlenecks in the history of the euro,” he said.

“With demand often exceeding supply, we’re seeing a shift to a sellers’ market, with growing numbers of suppliers able to hike prices.”

Growth was also strong for the UK’s manufacturing sector, which defied the country’s bearish economic outlook to post a PMI of 58.2 points for the month, its highest in over four years.

The pound’s weakness against the euro helped to drive a rush of new orders, which grew at the steepest rate since August 1994, boosting output and employment rates.

The growth comes despite grades to the UK’s economic forecast both by its own Office for Budget Responsibility and the European Commission.

Analyst Pantheon Macroeconomics noted that the UK’s manufacturing PMI rarely drifts more than a couple of points from the eurozone’s.

“Manufacturers are riding on the coattails of their Eurozone counterparts,” the researcher said.