UK manufacturing growth surprises in November while Eurozone disappoints with German contraction

Lynsey Barber
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The Eurozone narrowly avoided a contraction in manufacturing (Source: Getty)

The UK's manufacturing sector grew more than expected last month according to Markit's latest Purchasing Manager’s Index (PMI), as solid domestic demand offset weaker orders from other markets.

Markit’s PMI survey came in at a four-month high of 53.5 in November, ahead of the 53 expected and the revised 53.3 in October, offering a much-needed boost to George Osborne ahead of his Autumn Statement.

The "encouraging survey" boosts hopes GDP growth will hold up into the fourth quarter, according to IHS analyst Howard Archer.

Markit economist Rob Dobson said: “In the lead-up to the chancellor’s Autumn Statement, the November PMI survey shows the UK manufacturing sector continuing its solid expansion. Despite easing from the stellar pace set in the first half of the year, growth is still coming from a broad base that will aid its sustainability."

The manufacturing outlook across the Eurozone was far gloomier however, as it narrowly avoided contraction at 50.1 in November, its lowest since July 2013

Germany’s manufacturing unexpectedly fell, while the sector in France and Italy continued to shrink, however Spain showed surprise growth.

German PMI was 49.5, slipping under the 50 mark which signals contraction, lower than October's 51.4 and expectations of 50 for November. That's its lowest since December 2012. Italian and French manufacturing shrunk again, coming in at 49 and 48.4 respectively, though slightly ahead of expectations for France.

“With the final PMI coming in below the flash reading, the situation in euro area manufacturing is worse than previously thought," said Markit chief economist Chris Williamson. "Not only is the performance of the sector the worst seen since mid-2013, there is a risk that renewed rot is spreading across the region from the core. The sector has more or less stagnated since August, but we are now seeing, for the first time in nearly one-and-a-half years, the three largest economies all suffering manufacturing downturns."

An unexpectedly sunnier outlook came from Spain, where manufacturing rose to 54.7 from 52.6 in October and ahead of the 52.8 expected, it's highest since June 2007.

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