Euro: Factory Growth Holds Up as Costs Rise

October’s eurozone manufacturing PMI, a survey of purchasing managers, eased to 52.7 from 52.9, Reuters reported. A reading above 50 signals improving manufacturing conditions. Operating costs rose at their fastest pace in five months. Export orders strengthened, but overall new-order growth slowed, leaving factories facing higher costs as demand growth lost some pace.

The European Central Bank held rates unchanged on October 29 and kept its approach dependent on incoming data. It said higher energy prices posed upside risks to inflation and downside risks to growth. That leaves the euro facing an awkward balance: persistent inflation could support more tightening, but higher borrowing costs and weaker demand would weigh on activity. The ECB has not committed to a fixed rate path.