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Europe PMI at 14-month High; UK Factory Growth Slows

Reuters reports that although strong U.S. demand and a weaker euro helped manufacturing in the euro zone grow at its fastest pace in 14 months in November, Britain's manufacturing sector grew at a slower pace than expected in November despite strong output and robust export orders.

Reuters reports that although strong U.S. demand and a weaker euro helped manufacturing in the euro zone grow at its fastest pace in 14 months in November, Britain's manufacturing sector grew at a slower pace than expected in November despite strong output and robust export orders.

The RBS/NTC Research Eurozone Purchasing Managers' Index edged further above the 50 line that divides growth from contraction to 52.8, just above October's 52.7. The modest improvement was exactly in line with consensus forecasts and supports expectations that the euro zone economy is building on a third quarter recovery, led by exports.

"It doesn't suggest any further acceleration in manufacturing activity, but the level is high anyway, so I'd treat this as good news in a sense that it confirms we'll get strong industrial activity still in the fourth quarter," said Holger Fahrinkrug at UBS in Frankfurt. The PMI survey showed manufacturing production and new orders both grew at a faster pace in November and capacity indices flagged scope for further expansion.

In Great Britian, the PMI also showed that cost pressures and factory gate prices eased in November in a sign that inflationary pressures are abating. The headline PMI index fell to 51.0 in November -- below the 51.9 forecast by analysts -- from a downwardly revised 51.6 in October.
But it remained above the 50.0 that divides expansion from contraction for a fourth straight month.

"The outcome is disappointing against the backdrop of lower oil prices, a weaker exchange rate and firmer demand in the main European export markets," said Andrew McLaughlin, Group Economist at RBS.

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