Euro Zone Factory Activity Boomed in October

LONDON, Nov 2 Reuters Manufacturing growth in the euro zone soared in October but the recovery from severely depressed activity at the height of the coronavirus pandemic was again mostly driven by a buoyant Germany, a survey showed.

Also likely of concern to policymakers, and highlighting a further divergence in the recovery, a flash reading of the overall survey showed activity in the blocs dominant service industry contracted last month as a second wave of the virus swept across Europe.

Still, IHS Markits final Manufacturing Purchasing Managers Index climbed to 54.8 in October from Septembers 53.7, its highest reading since July 2018 and ahead of the 54.4 flash estimate. Anything above 50 indicates growth.

An index measuring output, which feeds into a Composite PMI due on Wednesday and seen as a good gauge of economic health, bounced to 58.4 from 57.1 in September, comfortably beating its 57.8 flash reading.

Euro zone manufacturing boomed in October, with output and order books growing at rates rarely exceeded over the past two decades. However, while the data bode well for production during the fourth quarter, the expansion is worryingly uneven, said Chris Williamson, chief business economist at IHS Markit.

Germany was once again the star performer by a wide margin, as factories reported a surge in new orders that surpassed anything previously seen in the surveys 25year history.

But Germany, like some of its peers in the bloc, has recently imposed controls…

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