Manufacturing data for the euro zone released on Wednesday show that the region is still in a contraction phase. A report compiled by Markit indicates that Manufacturing Purchasing Managers’ Index (PMI) rose to 48.8 in January to record its sixth month below the 50 mark that divides growth from contraction.
The January manufacturing numbers did move up from December’s 46.9 and beat estimates of 48.7 but the numbers are still weak as new order levels continued to decline across the region suggesting it may be some time before the troubled currency union’s economy returns to solid growth.
The PMI’s new orders index, at 46.5, was above December’s 43.5 but still marked a contraction for the eighth month in a row.
Meanwhile Germany’s PMI showed its manufacturing sector expanded for the first time since September. Despite indication of strengthening in Europe’s largest economy, it was not enough to support the euro zone PMI numbers as a whole.
Confidence overall in the euro region is still weak as fears still linger over Greek debt. If Greece does not quickly secure a debt swap deal with private creditors it could face a disorderly default. Also, another indebted euro zone member is Portugal, which has recently drawn attention as its 10-year bond yields reached record high this week.