Eurozone Economy Remains Buoyant in Q4 2006

05 January 2007

HENLEY-ON-THAMES, UK: The eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area rounded-off 2006 in robust style, according to the latest monthly Purchasing Managers' Index Report on Eurozone produced for the Royal Bank of Scotland by NTC Research.

The latest readings - both for the manufacturing and service industries - signalled an increase in private sector output for the forty-first consecutive month, with the rate of growth almost identical to the healthy pace seen throughout the second half of the year.

Manufacturing enjoyed the faster rate of expansion for the sixth straight month - albeit by only a small margin..

Key findings from the December 2006 report are:

  • New Business
    Growth of incoming new business remained buoyant, easing only very slightly compared to November and falling only marginally below the average for the year as a whole. New orders in the manufacturing sector rose at a faster rate than inflows of new business in the service sector for the sixth consecutive month.

  • Work Backlogs
    Backlogs of work rose for the sixteenth month in a row, driven up by the continued growth of incoming new business. However, the rate of increase slowed to a twelve-month low, primarily due to a marked reduction in the rate of growth of backlogs in the service sector, which slowed to near-stagnation.

  • Job Creation
    Private sector firms sought to reduce backlogs through the employment of extra staff for the sixteenth consecutive month. The rate of job creation remained close to November's five-month peak. The service sector continued to report the faster rate of growth.

  • Prices
    Input price inflation remained strong, picking up slightly from November's 15-month low as companies continued to report higher energy, transport, raw material and wage costs. Prices charged for goods and services also rose at a faster pace than November, with the rate of inflation hitting a three-month high. Charges have now risen for sixteen consecutive months.
The PMI Eurozone report features original survey data collected from a representative panel of over 5,000 companies across the euro area manufacturing and service sectors. Further information can be obtained by clicking here.

Data sourced from NTC Research; additional content by WARC staff