A rebound in German manufacturing helped to slow the contraction in euro-zone factory activity in January, but continued falls in other countries suggest a two-speed Europe may be emerging.
Markit Economics said its purchasing managers index for the manufacturing sector rose to 48.8 from 46.9 in December. This is still below the break-even 50.0 threshold, meaning activity fell, but is the strongest figure in five months.
"Euro area manufacturing has started 2012 surprisingly well, suggesting the region may avoid a slide back into recession," said Chris Williamson, Chief Economist at Markit.
But the rebound masks stark divergence between countries. While a few countries, like Germany, are showing signs of recovery, others, particularly those that have needed to be bailed out in the currency bloc's debt crisis, continue to face a bleak outlook.
In Germany, Europe's biggest economy, manufacturing activity expanded for the first time since September, marking its highest reading in six months at 51.0. But output fell again in France, Italy, Spain, Greece and Ireland.
Switzerland's manufacturing sector output slid to near a two-and-a-half year low in January, data showed Wednesday, suggesting the strong Swiss franc and faltering European demand are pushing the Alpine country's economy into recession.
The Swiss Purchasing Manager's Index dropped 1.8 points to 47.3 points from a downwardly revised 49.1 points in December, its 10th monthly decline since peaking at 62.2 in February last year. The December reading is weaker than the average forecast of 51.1 points by economists, and stayed well below the growth threshold of 50 points for a fifth straight month.
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