Eurozone Manufacturing Up, China Losing Sheen

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Eurozone Manufacturing Up, China Losing Sheen
Eurozone Manufacturing Up, China Losing Sheen

Eurozone Manufacturing Up, China Losing Sheen

The new data reveal that whereas activity in the Eurozone’s manufacturing sector is moving upward and notched a 31-month high in December, the Chinese manufacturing sector is facing huge challenges and unable to regroup its potential which it has been known for the last two decades and more.

According to new reports coming up Eurozone manufacturing is beating expectations and moving towards brighter prospects the next year. The preliminary reading of the manufacturing purchasing managers’ index shows that the sector rose to 52.7 in December which slightly better than to what it was in November where it closed at 51.6.

Earlier, the analysts had expected that it will grow at 51.9; however, the growth is higher than the expectations as manufacturing sector received better growth. Nonetheless, the composite output PMI, based on surveys of the manufacturing and service sectors also went up and rose to a three-month high of 52.1 in December.

A Better Prospect for the Next Year

Market observers believe that the rise in the PMI after two successive monthly falls is a big relief and that may have been a reason that forecast was kept low which has now been surpassed by the growth shown by the recent data. Most of these observers believe that the data puts the recovery back on track and soon it will be better at least by the second quarter of 2014.

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Investors believe that this upturn means that, over the final quarter, businesses saw the strongest growth in the last two years. This is all happening amidst the news that manufacturing output and new orders too have gone up for the sixth consecutive month and that is a reason that manufacturing has is moving upwards.

The manufacturing sector is being fueled by rising exports; however, the situation could not improve as there is not much growth in the service sector as it has been hurt by lackluster demand within the Eurozone. Whereas Germany’s factory activity echoed the growth in the euro zone’s manufacturing sector, the French manufacturing sector contracted to 47.1 in December.

Chinese Manufacturing Sector

On the other hand, the HSBC “flash” purchasing managers index for the manufacturing sector says that the country’s manufacturing sector ticked down to 50.5, compared with a final reading of 50.8 the month before. The data shows that the Chinese manufacturing sector is losing its sheen as the growth rate slowing down.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com