RTTNews - Slowdown in the euro area manufacturing activity decreased more than initially estimated in July, signaling a possible end to the recession, a survey from the Markit Economics showed Monday.

The final Markit Manufacturing Purchasing Managers' Index or PMI rose to an 11-month high of 46.3 in July from 42.6 in June. The index also stood above the flash estimate of 46. This was the second strongest rise in points terms in the survey history. However, the index is still below the neutral level of 50, showing a contraction in the sector.

A reading above 50 indicates expansion in the manufacturing activity, while a reading below 50 signals a contraction.

The improvement in the PMI was led by a near-stabilization of manufacturing production. The rate of slump in output eased significantly in recent months after hitting a record in February. Production even returned to growth especially in Germany, France and Spain, while contractions were seen in Italy.

The rate of decline in new orders also eased sharply since peaking last December. New export orders dipped at the slowest pace since June last year, driven by higher export sales in France and the Netherlands.

The survey found that stocks of finished goods eased at a near record pace again in July. Pointing towards further production gains in months ahead, the orders to inventory ratio rose to a two-and-a-half year high.

Markit Chief Economist, Chris Williamson said, Encouragingly the final numbers for output and new orders moved even closer to the 50.0 no-change level, pointing to a near-stabilization of production and demand.

Further, rate of job losses eased for the fourth straight month to the lowest since last November, with losses slowing in all countries most notably in Spain.

The PMI for all the big-four nations increased in July from the prior month level.

The German manufacturing PMI rose to 45.7 in July from 40.9 in June. It was also above the flash estimate of 45.2. This was the highest reading for ten months, but still below the neutral 50.0 mark, the Markit Economics and German Association for Materials Management, Purchasing and Logistics, BME revealed.

Supported by expansions in output and new orders, the Markit/CDAF PMI for French manufacturing climbed to 48.1 in July from 45.9 in June. It was higher than the preliminary estimate of 47.9. The latest reading was the highest in thirteen months.

The Italian Markit/ ADACI PMI stood at 45.4 in July, up from 42.7 in June. Manufacturing conditions deteriorated at the weakest pace since August 2008. Production, new orders and employment pointed towards an easing of the recession.

The Spanish manufacturing PMI moved up to 47.3 in July from 42.8 in June. The latest worsening of overall conditions was the weakest since January 2008, the Markit Economics reported.

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