Euro zone manufacturing continues expansion in Aug., employment rising at fastest pace in four years

The eurozone manufacturing sector continued to expand at a solid, steady pace in August, with the employment rising at the quickest pace in four years, a survey showed Tuesday.

The manufacturing purchasing managers' index (PMI), a key measure of manufacturing activity in euro zone countries, was 52.3 in August, only a shade below the earlier flash estimate and July's final posting, both of 52.4, according to Markit, a leading global provider of financial information services.

A reading above 50 indicates expansion, while a reading below 50 represents contraction.

The survey showed, the euro zone manufacturing further expanded in production and new business, with rates of increase improving to the quickest since May 2014 and April 2014 respectively.

Meanwhile, demand improved in both domestic and export markets, as highlighted by a solid and accelerated increase in new export business.

This supported further job creation, as manufacturing sector employment rising at the fastest pace in four years in the euro zone.

Among the 19-member states of the euro zone, the deepest contraction of manufacturing sector remained with Greece, mainly due to a lack of new orders and a further sharp drop in production.

The Greek PMI reading of 39.1 in August, well below the neutral 50.0 mark and one of the lowest readings in the survey's history.

Output, new orders, new export business and employment all suffered further deterioration in August, but the rates of contraction all slowed sharply.

At the same time, France manufacturing contracted further due to accelerated falls in output, new orders and employment.

Fortunately, continued growth in Germany, Italy, Spain, the Netherlands, Austria and Ireland in manufacturing sector offset the ongoing contractions in France and Greece.

Meanwhile, average output prices at euro zone manufacturers rose slightly for the fourth time in the past five months in August, while average input costs fell for the first time in six months, according to Markit.

"The eurozone manufacturing sector showed continued resilience in August, with output growth and inflows of new business both strengthening," Rob Dobson, Senior Economist at Markit said.

"Based on the historical relationship, the PMI is tracking at somewhere close to a 2 percent annualized increase in industrial production so far in the third quarter, a modest gain but still representing a positive step forward," Dobson said. Endit