Eurozone manufacturing activity contracted for a 10th straight month in November, but factories in the bloc fared slightly better than expected as optimism rose.
IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) rose to 46.9 for November, better than expected but still below the 50-point threshold indicating contraction.
The bloc’s factories have contracted every month since February, but last month’s reading was the highest in three months and ahead of preliminary estimates of 46.6.
“Although still signalling a steep rate of decline, the manufacturing PMI nonetheless brings some encouraging signals which will fuel speculation that the worst is over for euro area producers,” said IHS Markit’s Chris Williamson.
Rates of new orders and output recorded milder falls in November than the preceding month, but job losses persisted despite an uptick in confidence.
Business confidence climbed to a five-month high as sentiment continued to recover from its almost seven-year low in August, with all nations covered by the survey indicating some optimism that output would be higher than present levels in a year’s time.
Williamson described the “marked upturn” in sentiment as “promising”, and said the rise was due in part to manufacturers’ reduced concerns over trade wars.
“We nevertheless still need to see a further notable easing in the rate of loss of orders before getting too excited about the prospect of an imminent return to growth for manufacturing,” he added.
The Euro was flat against the dollar following the reading.
A composite PMI reading for the bloc is due to be released on Wednesday.