Palma.—Spain's manufacturing activity recorded its strongest reading for more than two years in June, suggesting the sector's long contraction may have stabilised.

A rise in new orders pushed Spain's purchasing managers' index (PMI) up to 50, from 48.1 in May. The monthly industry survey provides a snapshot of industry conditions and a reading above 50 indicates growth. Meanwhile, separate data showed that the eurozone unemployment rate reached 12.2 percent in May, its highest level ever.

Other economic data released by Eurostat yesterday showed inflation in the eurozone rose to 1.6 percent in June, from 1.4 percent in May. June's figure is comfortably below the European Central Bank's target of 2 percent. European Union leaders held a summit last week which put joblessness at the top of its agenda, and agreed to launch a special scheme for young jobless Europeans.

The PMI survey suggested conditions in the manufacturing sector were stabilising across the eurozone, with the reading for the bloc as a whole rising to 48.8 - 16-month high, albeit still below the 50-level that marks the difference between expansion and contraction. However, Germany's reading fell following a drop in new orders. June's PMI reading for Spain was the first time in 26 months the index has reached 50, indicating that the country's manufacturing sector may have bottomed out following a prolonged contraction.

The figures are compiled by research firm Markit, and they were hailed as a promising sign by Markit's senior economist, Andrew Harker. “The second quarter of 2013 ended on an encouraging note for the Spanish manufacturing sector, with PMI data pointing to a rise in new business”, he said.


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