The final figure of euro zone manufacturing PMI for December confirmed the first estimate, showing a slight increase from the previous month. The headline index rose from 46.4 to 46.9, the first increase in nine months, but remains significantly below the 50-level.
National data show an upward revision in the German reading (48.4 compared to a first estimate of 48.1), while the French one was confirmed at 48.9. Also in Greece (42.0 from 40.9), Italy (44.3 from 44.0) and the Netherlands (46.2 from 46.0) manufacturing sentiment picked up slightly, while Spanish manufacturing PMI dropped to a 3-month low (43.7 from 43.8). The euro zone manufacturing sector continued to contract in December but there are early signs that the PMI’s are bottoming out. Rates of contraction for production eased across all nations covered and also the declines in total new orders and new export orders were less marked than in November.
Markit added that production appeared to have collapsed at a quarterly rate of approximately 1.5% in the final quarter of 2011. With both production and new orders still falling sharply in December, activity will probably continue to contract in the first quarter of the new year. The slight pick-up in December is a first encouraging sign that the slump in activity is slowing, which if extended in the coming months will lead to a less negative first quarter.