Let’s start with the good news…

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Let’s start with the good news – growth is back on the agenda after one of the toughest years on record, and the new year promises to bring new supply chain opportunities – along with a few challenges.

The Markit Euro zone Manufacturing Purchasing Manager’s Index reached a 21 month high of 51.6 in December, up from 51.2 in November.

The rate of growth in Germany held broadly steady at November’s 26-month high, whereas in France the pace of expansion accelerated after slowing slightly in the previous month.

Italy was notable in seeing the sharpest increase in production for 27 months, and the Netherlands and Austria also reported higher output, said Markit.

And for once, the UK appears to have outperformed the Euro zone:  the CIPS/Markit Purchasing Managers’ Index reached a twenty-five month high of 54.1 in December, up from 51.8 in November.

New orders rose at the strongest rate for twenty-nine months with market conditions starting to improve and companies moving to rebuild stocks.

However, there is also evidence of price pressures building in the Euro zone, partly as a result of low stocks at vendors.

“Stocks of both purchases and finished goods fell at similar rapid rates in December, though the falls were the smallest for 14 and nine months respectively and were slower than flash estimates. Purchasing activity rose for the third month running and to the greatest extent in almost two years,” it said.

And, before we get too carried away, it’s probably worth quoting the warning from CIPS chief David Noble who highlights the fact that new order growth was dependent mainly on domestic demand, while the capital goods sector continued to suffer from falling production levels.

Last year was all about downsizing operations to match the downturn and conserving cash. This year the challenges could actually be more complex as organisations seek to maximise the opportunities available.

Nevertheless, it’s nice to start 2010 with something positive to report.

Happy new year.

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