Euro
Bloomberg News
Euro-area factory output grew at a faster pace than economists forecast in December, led by Germany, as the currency bloc continued its gradual recovery from a record-long recession.
An index based on a survey of purchasing managers in the manufacturing industry increased to 52.7, a 31-month high, from 51.6 in November, London-based Markit Economics said in a statement today. That's above the estimate of 51.9 in a Bloomberg News survey of 35 economists. The gauge has been above 50, indicating expansion, for six months.
'The rise in the PMI after two successive monthly falls is a big relief and puts the recovery back on track,' Chris Williamson, chief economist at Markit, said in today's report. 'The upturn means that, over the final quarter, businesses saw the strongest growth since the first half of 2011, and have now enjoyed two consecutive quarters of growth.'
The European Central Bank left its main refinancing rate at 0.25 percent on Dec. 5, based in part on its forecast for the economy to 'recover at a slow pace' during the next two years. The ECB sees euro-zone gross domestic product falling 0.4 percent this year and rising 1.1 percent in 2014.
ECB President Mario Draghi said output growth should continue 'in particular owing to some improvement in domestic demand supported by the accommodative monetary policy stance.' Expansion 'should, in addition, benefit from a gradual strengthening of demand for exports,' he said.
Chinese Output
Manufacturing output in Germany, the euro area's largest economy, reached a 30-month high in December, while in France, the currency bloc's number-two economy, production slumped to a seven-month low, according to Markit.
The encouraging economic news from Europe contrasted with China, where a manufacturing index unexpectedly fell to a three-month low as output gains eased and employment weakened, suggesting the world's second-largest economy is vulnerable to a slowdown.
The preliminary reading of 50.5 for a Purchasing Managers' Index released today by Markit and HSBC Holdings Plc compares with a final figure of 50.8 in November and the 50.9 median estimate in a Bloomberg News survey.
Markit's U.S. manufacturing index probably increased to 55 in December from 54.3 a month earlier, a separate Bloomberg survey (ECONMUS) shows. The data will be published at 2 p.m. in London.
Car Sales
While the euro-area economy is gradually recovering, with 0.2 percent growth forecast for the fourth-quarter, the currency bloc is still struggling with the legacy of the debt crisis, including an unemployment rate of 12.1 percent in October.
RWE AG, Germany's second-largest utility, said on Nov. 14 that profit next year will almost halve on the weak outlook for power prices, and that it plans to cut about 10 percent of its jobs.
Car sales provide evidence of the pick-up in manufacturing, rising in October for a second month for the first time since 2011. November data for European car sales is due tomorrow.
Part of this trend, Hyundai Motor Co., South Korea's largest automaker, is targeting sales gains in Europe next year as a new version of the i10 small car adds to a regional car-market revival. Allan Rushforth, chief operating officer of Hyundai's Europe division, said on Dec. 10 that there were 'a number of new opportunities' for 2014.
'Europe seems to be turning the corner,' the IMF's Managing Director Christine Lagarde said on Dec. 10. The International Monetary Fund forecasts growth of 1 percent for the euro area next year.
To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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