Eurozone Manufacturing Adds Jobs at Fastest Pace in 20 Years -- Update
23 May 2017 - 11:17AM
Dow Jones News
By Paul Hannon
The eurozone's economic recovery maintained its recent, stronger
momentum in May as the currency area's manufacturing sector added
jobs at the fastest pace in 20 years while German businesses were
more optimistic than at any time since 1991.
Data firm IHS Markit said its composite Purchasing Managers
Index for the eurozone, based on a survey of 5,000 companies, was
unchanged at 56.8 in May, remaining at a six-year high. A reading
above 50.0 signals an increase in activity, while a reading below
signals a decline. Economists had expected the measure to fall very
slightly.
Separately, Germany's Ifo Institute said its measure of business
sentiment rose to 114.6 from 113.0 in April, reflecting what it
described as a "euphoric" mood.
The PMIs are the first measure of activity to cover the period
since pro-European centrist Emmanuel Macron was elected president
of France on May 7, easily defeating the anti-euro Marine Le Pen.
Mr. Macron's triumph followed March elections in the Netherlands
that saw Prime Minister Mark Rutte defeat anti-euro populist
candidate Geert Wilders. The French and Dutch votes reduce the
threat of a breakup of the currency area, with German elections due
later this year almost certain to return a pro-euro government.
The composite PMI for France rose to 57.6 from 56.6 in April,
reaching its highest level for six years. The German measure also
increased, hitting a 73-month high, but growth slowed in some other
parts of the eurozone.
IHS Markit said the readings for April and May are consistent
with quarter-to-quarter economic growth of 0.7%. If realized, that
would be the fastest expansion since the first three months of
2015.
Clemens Fuest, president of the Ifo Institute, said the
confidence measure points to quarter-on-quarter growth of 0.6% in
the three months to June, which would leave it unchanged from a
strong start to the year.
"Economic activity in Germany remains very brisk," Mr. Fuest
said.
Continued robust growth is helping create jobs, with purchasing
managers at manufacturing companies reporting that workers were
added to payrolls at the fastest pace in the survey's 20-year
history.
"Capacity is being strained by the strength of demand, with
backlogs of work showing one of the largest increases in the past
six years," said Chris Williamson, IHS Markit's chief business
economist. "Job creation has surged to the second-highest rate in
nearly a decade as firms seek to expand capacity and meet rising
demand."
The European Central Bank has increasingly stressed recently
that an improved jobs market is key to its decision on when to
start unwinding some of its stimulus measures, since a fall in
still high levels of unemployment is expected to boost wages and
inflation.
The rise in the PMI follows the release of a monthly survey by
the European Commission Friday that showed consumer confidence
during May was at its highest level since August 2007.
The strength of the eurozone, and particularly the German,
economy is likely to add to calls for an end to ECB support for the
recovery. Speaking Monday, the head of Germany's central bank said
the ECB shouldn't wait too long before withdrawing its large
monetary stimulus.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
May 23, 2017 06:02 ET (10:02 GMT)
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