BUSINESS

Europe’s manufacturing performance rises for first time in six months

The European economy’s manufacturing sector registered a strong performance for the first time in six months, raising expectations that Europe will be able to weather the possible recession this year.

Europe’s S&P Global Flash Eurozone purchasing managers’ index (PMI) rose to 50.2 in January from 49.3 in December.

PMI is an economic indicator derived from the monthly survey of private sector companies. It aims in providing information regarding the current and future conditions of a business to the decision-makers, analysts and investors of the company. A figure above 50 indicates growth.

According to the data, lower inflation, improved supply chains and the recent reopening of China’s Covid-scarred economy, greatly benefitted the European economy.

Among the European economies, Germany registered a robust performance with the composite PMI rising from 49.0 in December to 49.7 in January.

France, on the other hand, fell for a third consecutive month after a sharper drop in services activity.

While the rest of the eurozone, which is made up of 20 countries after Croatia joined in January, returned to growth.

“The survey undoubtedly brings welcome good news to suggest that any downturn is likely to be far less severe than previously feared and that a recession may well be avoided altogether,” said Chris Williamson, S&P’s chief business economist, reports AFP news agency.

He added that the survey suggested “a nadir was reached back in October, since when fears over the energy market in particular have been alleviated by falling prices, helped by the warmer than usual weather and generous government assistance”.

Despite positive PMI, inflation remains to be high at 9.2 per cent, however, it fell fallen for two months in a row, driven by slowdown in the rate of energy price rises.

S&P’s Williamson said however the increase in inflation for goods and services would “add encouragement to the hawks to push for further monetary policy tightening”.

(With inputs from agencies)

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