Eurozone Manufacturing Accelerates As Greece Joins In

Eurozone factories had their busiest month in more than six years during June, with the expansion even spreading to Greece, a persistent laggard.

The pickup is consistent with other indications that economic growth in the currency area accelerated in the three months to June, having already speeded up in the first quarter.

Data firm IHS Markit Monday said its Purchasing Managers Index for eurozone manufacturing--which is based on a survey of 3,000 companies--rose to 57.4 from 57.0 in May, reaching a 74-month high. That was slightly higher than the preliminary estimate of 57.3.

The pickup in manufacturing was led by Germany, Austria and the Netherlands, but also saw activity increase in Greece for the first time since August 2016, albeit very slightly.

A separate release from the European Union's statistics agency showed the jobless rate stalled at 9.3% in May, with only 5,000 people finding jobs during that month, but the manufacturing survey suggests that will prove temporary.

"There's no sign of the impressive performance ending any time soon," said Chris Williamson, chief business economist at IHS Markit. "Optimism about the year ahead has risen to the highest for at least five years, backlogs of orders are building up at the fastest rate for over seven years and factories are reporting near-record hiring as they struggle to deal with the upturn in demand."

The strengthening economic recovery has prompted some policy makers at the European Central Bank to question the need to maintain its stimulus measures at the current settings, although opinion is divided.

Speaking Friday, executive board member Sabine Lautenschlaeger said the central bank should prepare to reduce its monetary stimulus despite falling short of its inflation target.

However, others are more cautious given that the annual rate of inflation fell for a second straight month in June, and to its lowest level in 2017. Speaking Sunday, fellow board member Yves Mersch said that while low interest rates ushered had helped bolster the currency area's economy, the recovery isn't yet self-sustaining.

Write to Paul Hannon at

(END) Dow Jones Newswires

July 03, 2017 05:21 ET (09:21 GMT)