Eurozone manufacturing growth remains marked at start of 2021

According to the report from IHS Markit, growth of the Eurozone manufacturing economy remained resilient at the start of 2021, with the sector expanding for a seventh successive month and again at a marked pace. 

After accounting for seasonal factors, the PMI recorded 54.8, down slightly on December’s 55.2 and little-changed on the earlier flash reading. January’s figure was amongst the highest seen over the past two-and-a-half years. Growth was recorded across all three broad market groups during the latest survey period. However, the improvement in operating conditions seen at consumer goods producers was marginal amid a drop in new orders. In contrast, marked rates of expansion continued to be recorded in both the intermediate and investment goods sectors at the start of 2021.

Overall, eurozone manufacturing production increased for a seventh successive month, although the rate of expansion was the weakest in the current sequence. Similar developments were seen for new orders. Whilst the current growth sequence was also extended to seven months, the rate of expansion was down since December. That was despite export trade registering its best growth performance in the past three months. With overall new order book volumes increasing markedly, manufacturing companies faced further pressure on their capacity as evidenced by another month of backlog growth. January marked the sixth successive month that work outstanding has risen, although growth was the weakest since last September.

Finally, looking ahead to the next 12 months, confidence improved to a three-year high in January largely on hopes that vaccine developments in the coming months will help to ease current pandemic restrictions and lead to a noticeable uplift in economic activity.