Eurozone manufacturing PMI shows region may skirt recession?

LONDON (ShareCast) - January's purchasing managers' index (PMI) for the Eurozone manufacturing sector compiled by Markit Economics suggests that the area's economy may avoid a recession, the financial information agency said this morning. The Eurozone's final manufacturing PMI set a five-month high of 48.8 in January, compared to 46.9 in the previous month. It is the second consecutive increase, although it remains below the 50 threshold (above which indicates an expansion). "Euro area manufacturing has started 2012 surprisingly well, suggesting the region may avoid a slide back into recession," said Markit's Chief Economist Chris Williamson. "Although producers reported only a marginal increase in output in January, the signs of improvement represent a marked contrast to the steep falls seen late last year. Furthermore, an upturn in the ratio of new orders to warehouse stocks points to increased production in coming months," he said. Looking at the different Eurozone members: In Germany, final PMI manufacturing rose to a six-month high of 51.0 from 48.4. The preliminary reading was 50.9. In France, final PMI manufacturing rose to a two-month high of 48.5 from 48.9. The preliminary reading was also 48.5. In Spain, PMI manufacturing rose to a five-month high of 45.1 from 43.7. In Italy, PMI manufacturing rose to a four-month high of 46.8 from 44.3. According to analysts at Digital Look, today's data shows that the slowdown in activity within the industrial sector may be coming to an end. "However, we see differences between countries," they add. "Germany and Austria came out of contractionary levels while Spain, Italy, and the Netherlands improved but still remain below the 50 point line that separates contraction from expansion." FM