Manufacturing in the eurozone expanded in November at its fastest pace in four months, boosted by strong activity in France and Germany, while manufacturing production in the U.K. touched a 16-year high, according to a survey.
The Markit Eurozone Purchasing Managers' Index (PMI) rose to 55.3 in November, remaining above the 54.6 seen in October.
Manufacturing production rose for the sixteenth month and at the fastest pace seen since August, while new orders rose at the fastest rate seen since July, the report stated.
France's manufacturing production hit an eight-month high. Germany's manufacturing activity expanded to touch a three-month high at 58.1 in November.
The fact that France lagged behind Germany very slightly, despite seeing the best monthly gain in ten years, illustrates the strength of the growth surge that these two countries are currently experiencing, Chris Williamson, the chief economist at Markit, said.
German and French economies are mainly being driven by domestic demand, that is visibly absent in most other economies that are struggling.
The data highlight how domestic demand holds the key to these euro country growth divergences, Williamson said.
Austerity measures and growing political uncertainties led to weaker domestic order book inflows, offsetting any export gains and subduing recoveries, in all cases except France and Germany, he added.
Job creation also increased in Germany, the Netherlands and Austria. France also reported a rise in job creation for the first time since April 2008.
However, the economy continues to be gloomy in other parts of Europe as the Greek PMI remained well below the no-change mark. Spain's PMI also dropped to 50.00, falling back into contraction for the first time in nine months, as output and new orders sank bank into contraction, the report said.
A PMI number above 50 indicates growth while anything below indicates contraction.
Spain's economy is expected to be the next in line for a bailout after Greece and Ireland earlier this year. Job creation also slowed down in Spain, Italy, Ireland and Greece.
Separately, the U.K. manufacturing activity touched a 16-year high, the survey said.
The Market PMI rose to 58.0 in November, the highest level seen since September 1994.
November saw production rise for the eighteenth successive month and at the fastest pace since May, the survey said, adding that staffing levels have now increased in the past eight months.
New export orders rose at the fastest pace seen in seven months, with more clients coming in from France, Germany, U.S., China, India and the Middle East.
The export orders balance edged up, suggesting that manufacturers are still benefiting from the recovery in global demand. But even more encouraging was the surge in the overall new orders balance from 54.0 to 59.1, suggesting that a strong rise in domestic demand is also driving the manufacturing recovery, Samuel Tombs, an economist at Capital Economics, said in a note.
Nonetheless, with weaknesses developing in overseas markets and the fiscal squeeze set to kick in at home, manufacturing recovery will be lacklustre next year, he added.
Inflation still remains a severe concern in the U.K as it rose to its highest level seen since August 2008. The steepest increases were seen in food, textiles, clothes and timber and paper.
The Bank of England continues its fight against inflation that has remained persistently over the 2 percent target for the past several months. The BoE Policy Committee, which is responsible for maintaining the interest rates and asset purchases, has opted to keep the bank rate at 0.5 percent and maintain the size of the asset purchase.