You are here

Euro zone Nov factory growth at 19-month high

[LONDON] Euro zone manufacturing growth picked up to a 19-month high in November but the pace was still relatively modest, adding to pressure on the European Central Bank to ease policy again, a survey showed on Tuesday.

That came despite firms cutting prices for a third month and even as a weaker euro, which makes the region's goods cheaper for foreign buyers, boosted exports.

As part of its battle to stimulate growth and inflation - nowhere near the Bank's 2 per cent target ceiling at just 0.1 per cent in October - the central bank has been pumping 60 billion euros(S$89.6 billion) a month of new money into the economy since March.

But a Reuters poll last week suggested it would expand and extend its quantitative easing programme when policymakers meet on Thursday. It will also cut its deposit rate further into negative territory, effectively increasing the amount banks have to pay to park money overnight. "With growth remaining modest, prices falling and manufacturing still some 10 per cent smaller than its pre-crisis peak, the scene is set for the ECB to unleash further stimulus at its December meeting to ensure momentum continues to build,"said Chris Williamson, chief economist at survey compiler Markit.

Markit's final manufacturing Purchasing Managers' Index rose to 52.8 in November, in line with an earlier flash reading and above October's 52.3. It has held above the 50 mark that separates growth from contraction for well over two years.

An index measuring output that feeds into a composite PMI due on Thursday and seen as a good guide to growth rose to an 18-month high of 54.0, just pipping the flash 53.9 and comfortably above October's 53.6.

While a sub index measuring export orders rose to a six-month high, the output price index remained sub-50 for a third month. It was 49.3, above October's 48.6 but below the flash reading of 49.5.