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The Euro Zone Manufacturing PMI of 56.7% for July released by Markit Monday was even better than the earlier flash estimate of 56.5% − a number that surprised on the upside. Despite all the gloom and doom about the prospects for the euro zone, growth of both manufacturing production and new orders accelerated to the fastest growth since April while employment rose at its fastest rate in 26 months.

The manufacturing sector in Greece is still contracting, though, albeit at a reduced rate. However, the manufacturing PMIs in the other three lemons in the euro zone’s basket, Italy, Spain and Ireland, are relatively steady.

CountryManufacturing PMI
July 2010June 2010Trend
Euro zone56.755.6Higher, expanding
Germany61.258.4Near previous high, expanding
France53.954.8Softer, expanding
U.K.57.357.6Softer, near high, expanding
Greece45.342.2Higher, contracting
Italy54.454.3Steady, expanding
Spain51.651.2Steady, expanding slowly
Ireland51.451.8Softer, expanding slowly

Source: Markit.

The published PMI data (manufacturing and services) to date suggest that the euro zone economy is on track to grow in excess of 2% in the third quarter compared to a year ago (click to enlarge).

Sources: Markit; European Commission; Plexus Asset Management.

Source: Manufacturing in the Eurozone on a Roll