Euro area’s modest recovery ‘sets scene’ for Draghi stimulus
Factory growth in the euro area accelerated last month, extending a tepid recovery that may require more stimulus from the European Central Bank.
Markit Economics said in a report on Tuesday that its Purchasing Managers Index rose to 52.8 from 52.3 in October. All countries surveyed posted readings above the key 50 level that indicates expansion apart from Greece, where manufacturing has shrunk for 15 straight months.
While the euro-region economy is slowly improving, both growth and inflation are subdued, and ECB President Mario Draghi has signaled policy makers will respond with action this week. Markit said price pressures remained “on the downside” in November, with output charges and input costs falling.
“It’s by no means a spectacular pace of expansion,” said Chris Williamson, chief economist at Markit in London. “The scene is set for the ECB to unleash further stimulus at its December meeting to ensure momentum continues to build.”
In Germany, Europe’s largest economy, the manufacturing index rose to 52.9 in November from 52.1, higher than an initial estimate published on November 23. Measures in Italy and Spain also rose, while France’s PMI was unchanged from October. In Greece, the manufacturing index remained below 50, though it advanced to 48.1 from 47.3.
Samuel Agass, an economist at Markit, said Greek manufacturing “appears to be edging towards stability.”
“However, incoming new orders and buying activity are declining sharply, indicating consumption is being constrained by the capital controls imposed on the economy,” he said.
[Bloomberg]
