Manufacturing activity in the euro zone expanded at its fastest rate in 21 months in December, in line with the flash estimate published last month, but new orders growth slowed slightly, a survey showed today.

Overall manufacturing activity in Germany expanded at its fastest pace since May 2008, although slower than previously expected, while France and Italy also saw activity tick up from November.

Italian production saw its best performance in 27 months.

But it was a different story in Spain, where manufacturing has contracted for over two years and did so at a faster pace last month than in November. Spain also experienced the sharpest rate of order book contraction in the euro zone, Markit said.

The European Central Bank has slashed interest rates to a record low of 1 per cent and adopted a loose monetary policy in a battle to pull the bloc out of recession.

Unemployment remains a concern for the ECB. The factory employment index showed the nineteenth straight month of job losses, although at a slower pace than in November and the mildest rate in 15 months.

Euro zone manufacturing expands - The Irish Times - Mon, Jan 04, 2010