Daily Management Review

Factory activity in Eurozone sees gradual recovery in January 2020


Green shoots are in sight for manufacturing activity in the Eurozone in January 2020 – IHS Markitt.

According to the results of a survey conducted by IHS Markitt, although factory activity at the Eurozone contracted in January, it did so at its shallowest rate since mid-2019 thus suggesting that headwinds facing the EU’s manufacturing industry are calming down.
In January 2020, IHS Markit’s final manufacturing Purchasing Managers’ Index rose to a nine-month high of 47.9, just above a preliminary reading of 47.8 and edging closer to the 50 mark that separates growth from contraction. In contrast it was 46.3 in December 2019.
“Euro zone manufacturing started 2020 with green shoots of recovery in sight,” said Chris Williamson, chief business economist at IHS Markit. “The improvement adds to our view that the euro zone economy could see growth strengthen in the coming months, meaning the European Central Bank will hold off with any policy changes and instead focus on its strategic review.”
In December 2019, the EU’s central bank had launched a broad review of its policy which is likely to see its new President Christine Lagarde redefine the ECB’s main goal of price stability and ways and means to achieve it.
For years, the European Central Bank has struggled to maintain inflation levels just below its 2% target.
Forward looking indicators like new orders, quantity of purchases, employment and future output have all improved in December 2019.