By William L. Watts, MarketWatch
LONDON (MarketWatch) -- Manufacturing activity across the 16-nation euro zone grew at its fastest pace since June 2006, according to the final Markit euro-zone manufacturing purchasing-managers index for March, released Thursday.
But the data also reflected a tale of two Europes, illustrated by a surge in activity in Germany and a sharp drop-off in embattled Greece.
Overall, the euro-zone manufacturing PMI rose to 56.6 in March from 54.2 in February, exceeding a preliminary estimate of a rise to 54.2.
The PMI is a weighted average of managers' responses to queries on new orders, production, employment, inventories and supplier performance indexes. A figure of more than 50 indicates an expansion in activity, while a figure of less than 50 signals contraction.
"A weakened euro combined with rising global demand helped boost export growth to the highest for 10 years in March," said Chris Williamson, Markit chief economist. Output grew at a pace exceeded only twice over the past 12 years, while job losses were the slowest since Lehman Brothers collapsed in September 2008.
The euro (CUR_EURUSD 1.3498, -0.0008, -0.0592%) traded at $1.3504 versus the dollar, little changed from Wednesday.
Germany, Europe's largest economy, benefited from rising global demand, which pushed the country's PMI reading to 60.2 in March from 57.2 in February, the highest level in nearly 10 years. The final reading exceeded the preliminary estimate of 59.6.
The manufacturing PMI reading for France, the euro-zone's second-largest economy, also jumped, to 56.5 from 54.9 in February, boosted by a sharp rise in new order volumes.
Greece falters
And Italy's data also showed accelerated activity, with the PMI rising to 53.7 from 51.6 in February.
Data showed activity in Spain expanded for the first time in 28 months but continues to lag that of other big economies in the region. The nation's manufacturing PMI reached 51.8 in March from 49.1 in February.
Greece, meanwhile, went backward. Manufacturing PMI fell to an 11-month low of 42.9 as manufacturing fell at a "substantial pace" during March, Markit said.
The Greek economy is expected to face years of weakness as the government attempts to slash its budget deficit to less than 3% of gross domestic product -- the European Union limit -- by 2012 from 12.7% last year.
National divergences in March marked a survey record, Williamson said, "ranging from record output growth in Germany to a steep and accelerating rate of contraction in Greece, where output is now falling at a rate not far off that seen at the very height of the financial crisis."
