Germany buoyed by more exports

Amsterdam: Europe's manufacturing industry grew more than expected in December, powered by Germany's export-led expansion.

A gauge of manufacturing in the euro area rose to 57.1 from 55.3 the previous month, Markit Economics, of London, said yesterday.

That's above the 56.8 reported earlier for December. A reading of more than 50 indicates expansion.

Germany is driving the euro region's recovery as reviving global growth boosts orders at companies including Daimler AG, encouraging investment and hiring.

German business confidence unexpectedly improved to a record last month as declining unemployment encouraged consumer spending even as governments across the region stepped up austerity measures.

"Germany remained the star performer, seeing near-record growth, followed by France, where the PMI slipped only slightly from November's 10-year peak," Chris Williamson, chief economist at Markit, said in a statement.

"Welcome signs of recoveries were also evident in the periphery, where export sales helped boost output growth in all cases except Greece, where the rate of decline at least moderated."

A gauge of manufacturing in Germany, Europe's largest economy, rose to 60.7 in December from 58.1 the previous month, while the indicator for France slipped to 57.2 from 57.9, Markit said.

A gauge for Italy advanced to 54.7 from 52.

The figures "suggest that the manufacturing recovery may be broadening out to help lift economic growth outside of the French-German core in early 2011," Williamson said.

Production rising

"The data are consistent with industrial production rising across the single-currency area at a quarterly rate of two per cent."

The euro pared losses after the data were released and was at $1.3311 at 12.16pm in Amsterdam, down 0.6 per cent from last week.

Factory activity also may be picking up in the US, the world's biggest economy.

US manufacturing probably grew at the fastest pace in seven months in December, economists said before a report due later last night.

China's manufacturing growth, meanwhile, slowed in December partly due to tighter monetary policy.

The Chinese central bank raised interest rates on December 25. Six days later, the currency regulator said it was expanding a programme to let exporters keep revenue overseas.

In Europe, German truck production may increase 11 per cent in 2011, according to the VDA industry group.

"Although we haven't returned to pre-crisis levels, the upward trend is clearly visible," VDA President Matthias Wissmann said last week.

German consumer spending may bolster an expansion in 2011, the Bundesbank said December 13.