LONDON, Feb 1 (Reuters) - The downturn in euro zone
manufacturing activity eased again last month suggesting the
worst may be over, according to a survey which showed price
pressures slackened and the fall in demand moderated, driving a
surge in optimism.
S&P Global's final manufacturing Purchasing Managers' Index
(PMI) climbed to a five-month high of 48.8 in January from
December's 47.8, in line with a preliminary reading but still
below the 50 mark separating growth from contraction.
An index measuring output, which feeds into a composite PMI
due on Friday that is seen as a good guide to economic health,
registered 48.9, its highest since June and an improvement from
December's 47.8. It was nevertheless its eighth straight sub-50
reading.
"Although euro area manufacturers continued to report
falling output and deteriorating order books in January ... the
picture is considerably brighter than the lows seen back in last
October heading into the winter," said Chris Williamson, chief
business economist at S&P Global.
"Not only has the rate of output decline moderated now for
three consecutive months, but business optimism about the year
ahead has also surged higher over the past three months."
An index measuring new orders moved up closer to the
breakeven mark and factories increased headcount at a faster
pace. This was reflected in the future output index which jumped
to 58.2 in January from 53.8, an 11-month high.
The euro zone eked out growth in the final three months of
2022, managing to avoid a recession, as gross domestic product
expanded 0.1% in the fourth quarter, data from Eurostat showed
on Tuesday, outperforming expectations in a Reuters poll for a
0.1% drop.
That outperformance was despite sky-high energy costs and
rising interest rates taking a heavy toll on the economy.
Although the PMI's input prices index fell last month the
index reflecting output prices rose slightly - but still
remained firmly below levels seen over much of the past two
years.
That will likely be welcomed by policymakers at the European
Central Bank who have struggled to bring inflation, which
official data later on Wednesday is predicted to show was 9.0%
last month, anywhere close to their 2% target.
On Thursday those policymakers are expected to announce
another 50 basis-point increase to the Bank's deposit rate and
follow that up with another 50 basis-point lift in March, a
recent Reuters poll found.
(Reporting by Jonathan Cable; Editing by Hugh Lawson)
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