Eurozone Sept. factory PMI hits highest since 2011

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Factories across the eurozone enjoyed their most productive month since early 2011 in September, and the momentum looks set to continue into October as new order growth accelerated, a survey showed on Monday.

That increase in demand and activity came despite firms raising prices at the fastest rate in five months, in welcome news for policymakers at the European Central Bank, which looks set to announce a reduction of its asset-buying program soon.

IHS Markit's final manufacturing Purchasing Managers' Index climbed to 58.1 from August's 57.4, just missing a flash estimate of 58.2 but its highest level since February 2011. Any reading above 50 indicates growth.

VCG Photo

"The eurozone manufacturing boom kicked into an even higher gear in September. The recovery is also looking increasingly broad-based, with rising demand across the region lifting all boats," said Chris Williamson, chief business economist at IHS Markit.

Firms also built up backlogs of work, a good sign for future output, at the second-fastest rate in the 15 years it has been monitored while also raising prices.

Inflation in the bloc undershot expectations in September, official Eurostat data showed on Friday, highlighting price growth remained weak and supporting the ECB's case for only gradual removal of the stimulus.

IHS Markit's final manufacturing Purchasing Managers' Index climbed to 58.1 from August's 57.4, just missing a flash estimate of 58.2 but its highest level since February 2011. /Business Time Photo

Prices haven't risen as fast as the central bank would like. A Reuters poll last month suggested the ECB will announce at its October 26 policy review a six-month extension to its asset purchase program but cut its monthly spend to 40 billion euros from January.

According to the official figure shown on Monday, the unemployment rate in eurozone also remained stable in August at an eight-year low with the Europe's continued economic recovery.

The jobless rate in the 19-country single currency area in August was 9.1 percent, the same as July and down from 9.9 percent in August 2016, the Eurostat statistics agency said in a statement.

"This remains the lowest rate recorded in the euro area since February 2009," the report shows.

Eurozone unemployment holds at 8-year low in August /Eurostat Photo

Unemployment remained high in nations hit by the eurozone debt crisis with Greece on 21.2 percent, but it continued to decline in Germany, with 3.6 percent in August compared to 3.7 percent in July, and in the Netherlands, with 4.7 percent compared to 4.8 percent the previous month.

The unemployment rate for the entire 28-nation bloc stood at 7.6 percent in August, down from 7.7 percent in July and from 8.5 percent in August 2016, according to the report.

(With inputs from Reuters, AFP and AP)