Euro Area Markit PMI Manufacturing Reaches 3 Month High

The manufacturing sector of the 19 bloc Eurozone experienced a marginal increase in its pace of expansion in the month of September. Improvement was also witnessed in the rise of new orders, employment, new export businesses and output. The final Markit Eurozone manufacturing PMI has edged higher to 52.6 in September, its highest level since 3 months. Markit also noted that the average reading for the third quarter is now marginally higher than it was in the second quarter.

The Markit Manufacturing Purchasing Managers' Index for the bloc grew to 52.6 in September from 51.7 in August, unchanged from a flash estimate. An index measuring output also held above the 50 mark separating growth from contraction, coming in at 53.8, above August's 53.3.

The National PMI index recorded an increase in 6 out of the 8 nations surveyed. The German PMI also climbed to a 3 month high. Higher growth was also reported in Austria and Spain, growth has also been restored in Italy. In Netherlands and Ireland, the rate of expansion experienced a slight slowing within the month, growth also shrank marginally in Greece, as France’s PMI mounted a progressive march toward stability. The trends in new export orders are now in expansion territory in Ireland and Austria, it is however back in the red for Greece on the trail of 2 consecutive months of increase. The contraction has also been subdued in France for the time being.

Further increase in euro area employment and purchasing activity for the month of September have been greatly supported by the persisting rally in the eurozone’s manufacturing sector.  Euro area recorded job creation for the twenty-fifth straight month, with the rate of growth rebounding since August. Volumes of input purchase increased at the sharpest rate for three months.

"The big picture is that there have been some modest improvements in the manufacturing outlook recently. But the big question is still what is going on in the service sector," said Ben May at Oxford Economics.

Growth in the bloc's dominant service sector was probably at its weakest since late 2014, a sister survey due on Wednesday is expected to show. Still, a sub-index measuring new factory orders jumped to 53.4 from August's 18-month low of 51.4, registering one of its highest readings in the past year, and factories also accelerated hiring.

"For a region beleaguered by still-high overall unemployment, the fact that the upturn is generating more jobs is especially good news. The latest rise in factory payroll numbers was one of the best seen over the past four years," said Chris Williamson, chief business economist at IHS Markit.

The Markit release will provide some succor for the near-term trends, but there will still be fears surrounding the exposed position in the vent of further external shocks.