Euro-Area manufacturing expands at fastest pace in six years

An employee working in a braided sleeving machines workshop in Ambert, France.
An employee working in a braided sleeving machines workshop in Ambert, France.PHOTO: AFP

FRANKFURT (BLOOMBERG) - Euro-area factories expanded output at the fastest pace since 2011 as the currency bloc's economy continued to gather momentum.

A gauge of manufacturing activity rose to 56.7 in April from 56.2 the previous month, IHS Markit reported on Tuesday (May 2). An April 21 preliminary estimate was for an increase to 56.8.

With the European Central Bank showing little hurry to end extraordinary stimulus, global trade strengthening and political risk receding as centrist Emmanuel Macron looks poised to become the next French president, the currency bloc's recovery is set to broaden. Data on Wednesday will show gross domestic product gained 0.5 per cent in the first quarter, according to a Bloomberg survey.

"Companies are benefiting from the historically weak euro, improved growth in key export markets, rising domestic demand and ongoing central-bank stimulus including record-low interest rates," said Mr Chris Williamson, chief economist at IHS Markit. "Optimism about the year ahead, meanwhile, appears unaffected by political worries."

Manufacturing grew in all of the eight countries covered except Greece, where export orders decreased sharply.

The improvement in the euro area was supported by a pick-up in new orders and the fastest pace of job creation in six years amid rising backlogs of work. Data on Tuesday will show unemployment in the 19-nation region fell to 9.4 per cent in March, according to a separate survey.