Euro zone manufacturing PMI rises to 31-month high of 52.7 in December

Manufacturing activity in the euro zone expanded at the fastest pace since May 2011 in December, preliminary data showed on Monday.

In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index inched up to a seasonally adjusted 52.7 this month from a final reading of 51.6 in November. Analysts had expected the index to inch up to 51.9 this month.  

On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.

The report also showed that service sector activity in the euro zone declined to a seasonally adjusted 51.0 in December from 51.2 in November, disappointing expectations for an increase to 51.5. 

Commenting on the report, Chris Williamson, Chief Economist at Markit said that “The PMI is signaling a mere 0.2% expansion of GDP in the fourth quarter, suggesting the recovery remains both weak and fragile.”

He added that, “There’s little here to suggest that euro area policymakers need to increase their stimulus, but on the other hand the sluggish nature of the upturn adds to the sense that policy will remain ultra-accommodative for quite some time.”

Following the release of the data, the euro held on to modest gains against the U.S. dollar, with EUR/USD inching up 0.11% to trade at 1.3757.

Meanwhile, European stock markets were mildly higher. The EURO STOXX 50 advanced 0.5%, France’s CAC 40 added 0.3%, London’s FTSE 100 inched up 0.15%, while Germany's DAX tacked on 0.4%.