By Jonathan Cable
LONDON - Factories across the euro zone enjoyed their most productive month since early 2011 in
September, and the momentum looks set to continue into October as new order growth
accelerated, a survey showed on Monday.
That increase in demand and activity came despite firms raising prices at the fastest rate in
five months, in welcome news for policymakers at the European Central Bank, which look
set to announce a reduction of its asset-buying programme soon.
ECILT/EU
IHS Markit's final manufacturing Purchasing Managers' Index
climbed to 58.1 from August's 57.4, just missing a flash
estimate of 58.2 but its highest level since February 2011. Any
reading above 50 indicates growth.
An output index that feeds into a composite PMI due on
Wednesday rose to 59.2 from 58.3, its highest since April 2011.
"The euro zone manufacturing boom kicked into an even higher
gear in September. The recovery is also looking increasingly
broad-based, with rising demand across the region lifting all
boats," said Chris Williamson, chief business economist at IHS
Markit.
"Surging order book growth has encouraged manufacturers to
take on extra staff at a rate never previously seen in the
20-year history of the PMI survey."
Suggesting October will also be a busy month for factories,
a sub-index measuring new orders rose to 58.5 from 58.3. It has
only been higher once since early 2011, in June of this year.
Firms also built up backlogs of work - a good sign for
future output - at the second-fastest rate in the 15 years it
has been monitored while also raising prices.
Inflation in the bloc undershot expectations in September,
official Eurostat data showed on Friday, highlighting price
growth remained week and supporting the ECB's case for only
gradual removal of stimulus. (Full Story)
Prices haven't risen as fast as the central bank would like.
A Reuters poll last month suggested the ECB will announce at its
Oct. 26 policy review a six-month extension to its asset
purchase programme but cut its monthly spend to 40 billion euros
from January.