Activity in the eurozone's manufacturing sector shrank for a fifth consecutive month in January, further evidence that growth in the single currency economy remains sluggish. The eurozone manufacturing sector purchasing managers index (PMI) rose to a better than expected 49.3 in January from 48.4 in December, although it remained under the 50.0 level that indicates the mark between contraction and expansion. Economists had forecast that the index, which is based on a questionnaire sent to purchasing executives in over 1,500 companies, to rise to 48.5. The German PMI also rose in January, although it too remained under 50.0. It rose to 48.3 in January from a revised 47.0 in December. The figure was far better than the rise to 47.2 that had been expected.
In Spain, the PMI rose to 48.1 in January from 47.3 in December, while the French PMI hit 50.0 from 48.7. The general improvement in the PMI indicates that the economy may be beginning to pick up, albeit it at a slow pace. The European Commission has warned that the eurozone could contract in the first quarter while the German government last month cut its 2003 GDP growth outlook to 1.0pc from 1.5pc. //www.fxcentre.com