UPDATE 1-Euro zone factories pick up pace in October

* Euro zone manufacturing growth rebounds in October

* Factory jobs growth hits highest since March 2008

* German strength again offset weaker bloc members

* For Insider TV bulletin: http://link.reuters.com/maj33q

* For graphic, click on: http://r.reuters.com/tyq43q

(Adds details, comment)

By Andy Bruce

LONDON, Nov 2 (BestGrowthStock) – Euro zone manufacturers boosted
their output in October at a faster pace than previously
estimated, a business survey showed on Tuesday, with Spain and
Ireland both recovering while Greece continued to struggle.

The Markit Eurozone Manufacturing Purchasing Managers Index
(PMI) rose to 54.6 in October, revised up from the earlier
estimate of 54.1 and comfortably higher than the final reading
of 53.7 for September.

The survey showed factories across the currency area hired
staff at the quickest rate since March 2008 last month. But
worryingly for policymakers, there was still a growing
divergence among member states’ recovery rates.

Germany once again led the upturn, with growth accelerating,
and while Spain saw a return to positive territory France’s
factory upswing moderated as output slowed to a 14-month low.

Greek manufacturing stayed firmly in the grip of recession,
with the pace of contraction accelerating as output, jobs and
new orders fell but Ireland saw a modest return to growth.

Financial markets were little moved by the numbers.

“It is welcome news to see euro zone manufacturing picking
up in October and the sector looks like it can make a decent
contribution to GDP growth in the fourth quarter,” said Howard
Archer at IHS Global Insight.

“The concern is that going forward it will be held back by
inventory corrections drawing to a close in some countries,
slower global growth and domestic demand being limited in most
euro zone countries by tighter fiscal policy increasingly
kicking in.”

SLOWING

While still firmly above the 50 mark that divides growth
from contraction, the headline reading is still some way off
April’s post-recession high of 57.6.

Manufacturers reported improved output last month and they
took on staff at the fastest rate in around 2-1/2 years, the
survey of about 2,000 companies showed.

But euro zone unemployment is still running at more than 10
percent and any optimism over manufacturing may also be tempered
by surveys on the services sector on Thursday, expected to
confirm a picture of slowing growth. (EUPMIS=ECI: )

A Reuters poll of economists published last month showed the
16-nation euro zone economy growing 1.6 percent in 2010, before
slowing to 1.4 percent next year as countries step up budget
austerity measures. (EUGDPY: )

The uneven economic recovery will force the European Central
Bank to keep interest rates on hold at their record low of 1.0
percent until fourth quarter of next year, a Reuters poll last
week predicted. [ECB/INT]

The manufacturing output sub-index saw a strong upward
revision to 54.7 from the flash reading of 53.8, up from
September’s final number of 54.0. The jobs sub-index rose to
52.2 from 51.5 in September.

(For foreign exchange reaction, click [FRX/] and [USD/])

(For bond market reaction click on [GVD/EUR])

(For a guide to all PMI indexes (PMI/INDEX1: ))

-Detailed PMI data are only available under licence from
Markit and customers need to apply to Markit for a licence.

To subscribe to the full data, click on the link below:
http://www.markit.com/information/register/reuters-pmi-subscriptions

For further information, please phone Markit on +44 20 7260
2454 or email [email protected]

(Additional reporting by Jonathan Cable, Editing by Patrick
Graham)

UPDATE 1-Euro zone factories pick up pace in October