Eurozone manufacturing PMI hits 69-month high in Jan, price pressures continue to intensify

Markit’s Eurozone final purchasing managers’ index printed at 55.2 in January, up from the flash estimate of 55.1 and compared to a December’s reading of 54.9, data released on Wednesday showed. Business conditions at Eurozone manufacturers saw marked improvement at the start of 2017.

Output growth held steady at December’s 32-month record, underpinned by the strongest inflows of new business and the fastest job creation since the first half of 2011. Price pressures continued to intensify, with rates of inflation in input costs and output charges both gathering pace.

Growth was fastest in Austria, the Netherlands and Germany. The Italian index edged lower, slowing from 53.2 to 53, while the German manufacturing PMI undershot forecasts by ten basis points to rise from 55.6 to 56.4. France, meanwhile, posted its strongest manufacturing performance in nearly six years after the PMI rose ten basis points to 53.6. In contrast, the downturn in Greece accelerated.

“If current growth of manufacturing activity and the associated rise in prices is sustained, rhetoric at the ECB is likely to become more hawkish, albeit tempered with caution over the potential for political developments to cloud the outlook.” said Chris Williamson, Chief Business Economist at IHS Markit.

Final Eurozone PMIs failed to give the common currency a boost. EUR/USD trades an extremely narrow range as markets await FOMC policy meeting.