Eurozone sees factory boom despite woes

 
Julian Harris
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FACTORIES in the Eurozone ramped up production and prices in April, as manufacturing growth accelerated even faster than originally estimated.

Strong growth in the core powerhouse economies Germany and France continued to more than compensate for the sluggish factory sector in peripheral member states troubled by sovereign debt problems.

“The data means that 2011 has so far seen the best start to a year [for manufacturing] since the dot-com boom of 2000,” said economist Chris Williamson of Markit, which compiles the results.

Markit’s purchasing managers’ index (PMI) for the whole single currency area came in at 58, up from 57.5 in March and above the earlier estimate of 57.7.

German PMI surged to 62 (up from 60.9) while France’s factory sector increased from 55.4 to 57.5 in the index.

All scores above 50 indicate expansion.

However, Spain’s manufacturing sector reported near-stagnation last month, slipping one point in the index to 50.6.

Greece continues to print sub-50 scores in the index. Although the rate of its factory sector’s contraction slowed, employment in Greek manufacturing is still falling.

Spain also recorded a drop in factory jobs, contrasting with booming job creation in Germany, Austria, the Netherlands, and France.

“Divergence between robust growth in core and weaker growth in periphery remains a major issue for the Eurozone,” commented economist Dominique Barbet of BNP Paribas.

“However, this will not stop the ECB from hiking further in the future, firstly because the core is larger than the periphery and secondly since the PMI gains in the core are stronger than the PMI declines in the periphery,” Barbet said.

Average prices from the single currency area’s factories have increased for 13 months in a row, according to the PMI data.

Output price inflation was down only slightly from March’s survey record high, despite an easing of input costs for the second month running.