Eurozone manufacturing hits 32-month high

(BRUSSELS) - Eurozone manufacturing activity hit a 32-month high in January, driven by economic powerhouse Germany and helped as struggling France finally picked up, a key survey showed on Monday.

The Markit Economics eurozone manufacturing sector Purchasing Managers Index, a leading indicator of growth, rose to 54 points in January from 52.7 in December, moving further into positive territory above the 50-points boom-or-bust line.

Markit said the expansion in January was the strongest since May 2011, with the headline figure rising in each of the last four months.

Chris Williamson, Markit chief economist, said the figures showed "the eurozone manufacturing recovery gained significant further momentum in January."

Eurozone manufacturing at this pace would expand 1.0 percent in the first quarter, with Germany up by "perhaps as strong as three percent" in the three months to March, Williamson said.

German activity rose to 56.5 points in January from 56.3 in December, while France increased to 49.3, still in negative territory, from 48.8.

"Encouragingly, France is also showing signs of stabilising, enjoying a welcome return to export growth," Williamson said, but "manufacturing in the eurozone's second-largest member state remains in overall decline and a drag on the region."

He also noted a pick-up in Spain and Italy, while twice-bailed out Greece saw its manufacturing PMI rise above 50 points for the first time since August 2009.

This "is an important signal of how even the most troubled member states are returning to growth." he said.

Overall, the figures suggest the now 18-nation eurozone economy should grow 0.4-0.5 percent in the first quarter, he added.

The then 17-nation eurozone -- Latvia joined on January 1 -- escaped a record recession with growth of 0.3 percent in second quarter 2013, only to slow again to just 0.1 percent in the third.

Data since then suggests the economy has got over a soft patch and January's manufacturing report is further positive news, analysts said.

Howard Archer of IHS Global Insight said it "adds to the evidence that eurozone economic activity has regained upward momentum" after the third quarter slowdown.

"We estimate ... growth improved to 0.3 percent quarter-on-quarter in the fourth quarter of 2013 and the January manufacturing PMI suggests that the eurozone is building on this improvement," Archer said.