(RTTNews) - Eurozone private sector activity expanded for the third month in October, rising at its fastest rate in twenty-two months, survey data released by Markit Economics showed Wednesday.

The final composite output index rose to 53 in October, the fastest rate of increase since December 2007, from 51.1 in September. That matched a flash estimate released on October 23. A PMI reading above 50 suggests expansion in the sector. The composite output index includes both manufacturing and services purchasing managers’ indexes or PMIs.

“This signals that the Eurozone recovery is gaining momentum,” BNP Paribas economist Clemente De Lucia said.

Manufacturing continued to lead services in the recovery, after having seen a far deeper downturn. On November 2, Markit said Eurozone manufacturing activity rose for the first time in seventeen months in October. The PMI rose to 50.7 from 49.3 in September.

The services purchasing managers’ index climbed to 52.6 in October, higher than the flash reading of 52.3 and the September reading of 50.9, Markit said today. It was the second consecutive monthly increase in activity and was the strongest gain since December 2007. “Activity should increase further in the coming months,” BNP Paribas economist said.

“Surging growth in France helped propel the Eurozone recovery in October,” Markit Chief Economist Chris Williamson stated. “Germany and Italy are following with more modest rates of expansion, leaving Spain as the only country to see ongoing contraction in October, although even here the rate of decline continued to slow.”

The increase in private output was driven by a second consecutive increase in new orders, which showed the largest monthly improvement since November 2007 as demand picked up in manufacturing and services. France posted the strongest rate of growth of the big-four euro countries for the second successive month, and by a widening margin. The combined output of goods and services companies in France surged higher, growing at the fastest pace for three years, as growth of new orders hit a 23-month high.

Output and new orders also rose in Germany and Italy, the latter seeing increases for the first time since late 2007, but in both cases rates of growth were modest compared to those seen in France. The rate of increase of output even dipped in Germany for the second month running, failing to match the strong return to growth seen in August. However, growth of new orders accelerated in Germany to suggest that output growth may pick up again in coming months.

Spain was consequently the only big-four country to report a further contraction of goods and services output and new orders. Moreover, while output fell at the slowest pace since the country’s contraction began at the start of last year, the rate of decline of new orders intensified for the second month in a row.

The rate of job losses eased in both manufacturing and services during October. Job losses moderated in all big-four countries. Germany and Italy saw the smallest cuts in staff numbers, France the largest. However, although running at around half the pace seen earlier in the year, the overall decline in employment remained intense by historical standards of the survey, as firms continued to focus on cost cutting, especially in manufacturing.

Input costs rose marginally rather than remaining unchanged, as indicated by the flash, representing the first monthly increase since October of last year. A return to growth of manufacturing input prices was accompanied by an easing in the rate of decline of service sector input costs to near-stagnation. Of the big-four, only France saw lower input costs.

Output prices fell by less than signaled by the flash, dropping for the twelfth straight month but showing the smallest decline for ten months as rates eased in both manufacturing and services. However, the overall rate of decline remained severe as firms struggled to stimulate sales. France recorded the steepest fall in selling prices, closely followed by Spain, while Germany saw the weakest decline.

Separate survey data showed that Germany’s composite output index stood at 52.3 in October, down from 52.4 in September. The services business activity index dropped to 50.7 in October from 52.1 in September. That was lower than the flash estimate of 50.9.

The Markit/CDAF composite output index for France jumped to a 36-month high of 58.6 from 54.8 in September. The French services PMI rose to a 20-month high of 57.7 from 53.2 in September. The Markit/ADACI Italy services PMI climbed to 52.2 from 48.5 in September. Italian service sector output grew for the first time in twenty-two months.

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Posted in Categories: Economy, Eurozone, Forex, Releases.

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