ECONOMY

PMI survey seen positive

LONDON – Economists expect a major eurozone manufacturing survey to show the sector grew faster in December as surging global demand for goods offset any drag on exports from the strong euro. A Reuters poll of 23 economists gave a mid-range forecast for the Reuters Eurozone Purchasing Managers Index (PMI) to rise to 53.0 in December from 52.2 in November, well above the 50.0 line that divides growth from contraction. The index will be released on Friday morning. The eurozone has been trailing the United States into economic recovery and some manufacturers have complained that the euro’s rally this year, to around $1.25 from just below $1.00 last December, has made their exports less competitive. However, the PMI has shown a steady return to manufacturing growth since September and other recent data have shown the region’s biggest economy, Germany, picking up speed after three years of stagnation. Germany’s influential Ifo survey showed optimism about future business conditions rose in December to the highest level in nine years. «The continued surge in the Ifo expectations sub-index suggests that strong global demand is overshadowing the euro’s rise,» said Nick Matthews at Barclays Capital in London. German trade data yesterday showed exports booming despite the euro’s climb. «We expect the euro area manufacturing PMI to signal increased new orders and output growth, pushing the overall index to its highest since December 2000,» Matthews said, forecasting the PMI would rise to 53.0. The PMI survey of 3,000 manufacturers asks fact-based questions and is widely viewed by economists as a good indicator of industrial output and overall economic growth in the region. Forecasts for the December PMI ranged from 52.0 to 55.0. Equivalent manufacturing surveys in the United States and Asia have shown a worldwide resurgence in demand for goods, and the US index for November, compiled by the Institute for Supply Management, showed the fastest expansion since 1983. The ISM index is forecast to ease to 61.0 in December from November’s 62.8 when it is released on Friday afternoon. A Reuters companion survey for the eurozone services sector is also forecast to show stronger growth when it is released on January 6. The mid-range of 14 forecasts saw the headline business activity index for the service sector rising to 57.8 in December from 57.5 in November. «Like manufacturing, the services sector is also more optimistic thanks to the improving world economy,» said Gabriele Widmann at DekaBank.