Economy

Euro Zone Manufacturing Sector Continues to Recover, But France Lags Behind

Private sector manufacturing activity in the euro zone continued its recovery in December, as revised data released on Thursday indicated stronger growth within the region. However, the rate of decline in France has intensified, raising worries that the country could revert to a recession.

The euro zone’s manufacturing purchasing managers’ index (PMI) remained steady at a 31-month high of 52.7 in December, unchanged from the preliminary reading and an increase from 51.6 in November.

For the final quarter, the manufacturing sector is experiencing its best performance in two and a half years, aligning with a quarterly output growth rate of approximately 0.6%. Chris Williamson, Chief Economist, noted that the latest figures suggest production is growing at an annualized rate of about 1% as the year concludes.

In Germany, the euro zone’s largest economy, manufacturing output also expanded in December, with the PMI rising to a 31-month high of 54.3—up from a preliminary estimate of 54.2 and improving from 52.7 in November.

Spain’s manufacturing sector returned to expansion last month, while Italy’s sector posted the fastest growth since April 2011, bolstering optimism regarding the economic outlook for the euro zone’s third and fourth largest economies. The Spanish PMI climbed to 50.8 from 48.6 in November, driven by stronger orders and output, while the Italian index rose to 53.3 from 51.4.

Greece also showed positive signs, with increased output and new orders raising its PMI to a 52-month high, nearing the 50.0 level that denotes stability.

Conversely, France’s manufacturing sector faced deeper contractions, as its PMI dropped to a seven-month low of 47.0 from 48.4 in November. This weak performance heightened concerns that the French economy could report a second consecutive quarterly decline in the three months leading up to December, following a contraction of 0.1% in the previous quarter, potentially pushing the country back into recession.

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