As many headline stats for the Eurozone continue to cause headaches for markets and governments alike, there was a tiny spark of good news from the bloc‘s manufacturers.
The purchasing managers’ index (PMI), compiled by Markit Economics, showed that the manufacturing sector’s rate of growth rose by 0.4 percentage points in January, to 51. Any rate above 50 indicates growth. The PMI improved to a six-month high in January, from 50.6 in December and 50.1 in November.
Disappointingly, the increased growth in Spain, the Netherlands and Germany was offset by miserable stats from Greece, where the sector’s rate of contraction accelerated from 49.3 to 48.3 points, a 15-month low.
Howard Archer, an economist at IHS global insight, said we could be seeing the effects of low oil prices and a depleted euro:
This suggests that very low oil prices and the markedly weaker euro may just be starting to feed through to help Eurozone manufacturers, although there is still a long way to go before the sector is out of the woods. Furthermore, the European Central Bank’s stimulative measures should increasingly help matters, notably including the substantial Quantitative Easing program.
While the Eurozone continues to face major underlying problems, we suspect that Eurozone GDP could surprise on the upside in 2015, given the serious support coming from very low oil prices, the much more competitive euro and the ECB’s major stimulus.