Manufacturing sector shows record growth in December

Randall Padilla
January 2, 2018

Eurozone manufacturing sector activity grew the most since the survey began in mid-1997, final data from IHS Markit showed Tuesday.

The Investec Purchasing Managers' Index, which measures the health of the industry, rose to 59.1 in December, the strongest reading in the history of the series, up from 58.1 in November.

A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.

Meanwhile, the large food and beverages sub-sector recorded its highest monthly result since April 2016, while the non-metallic minerals sub-sector, wood and paper products and machinery and equipment all recorded their lowest index results for 2017.

The manufacturing sector employed less people as the sub-index of employment dropped 0.3 percentage points month on month to 48.5 in December.

"Manufacturing operating conditions improved in December, reinforcing the notion that economic growth has stabilized in 2017 and has even performed better than expected", said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

Finally, the Future Output Index signalled the strongest level of confidence in three months, with more than one-in-five survey participants forecasting higher production.

However, full-year growth was still the fastest in three years at 3.5 percent, raising the possibility that the Monetary Authority of Singapore (MAS) could tighten its exchange rate-based monetary policy this year. Moreover, output growth slowed to a modest pace.

The moderate decline in headline PMI was mainly attributable to the lower inventory, while production growth remained solid despite the "unfavorable working day effect", as there were two fewer working days in December 2017 compared with a year ago, said a CICC research report.

The NBS also said that China's official nonmanufacturing PMI rose to 55 in December, up from 54.8 in November.

"A lingering concern is that supply-side constraints pose a risk to the sector's ability to kick on", Smith said, adding that huge delivery delays would inevitably be borne out by sustained upward pressure on input costs.

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