Euro zone factory activity ends 2015 with growth in all countries

By Jonathan Cable

LONDON (Reuters) - Euro zone factory activity ended 2015 with expansions in all the countries covered by a survey released on Monday, suggesting that manufacturing growth over the year as a whole averaged above the previous three.

But despite firms cutting prices for a fourth month - and a weaker euro making the bloc's manufactured goods cheaper abroad - the growth remained tepid.

Markit's final manufacturing Purchasing Managers' Index rose to a 20-month high of 53.2 in December, just above a flash reading of 53.1 and beating November's 52.8. It has held above the 50 mark that separates growth from contraction for well over two years.

An index measuring output that feeds into a composite PMI due on Wednesday and seen as a good guide to growth also rose to a 20-month high, coming in at 54.5, just pipping the flash 54.4 and comfortably above November's 54.0.

"While there is much to be positive about in these figures, the underlying picture is still one of solid yet unspectacular expansion," said Rob Dobson, senior economist at Markit.

"With euro zone manufacturing still some 10 percent off its pre-crisis peak, it looks as if the sector still has some distance to travel before the climb back to full recovery is

completed."

A new orders index rose to 54.2 from 53.5, its highest reading since March 2014, helped by the price discounting.

The European Central Bank has so far failed to get inflation anywhere near its 2 percent target ceiling despite ultra-loose monetary policy and the sub-50 output price index will increase pressure on the Governing Council to ease further.

(Editing by Hugh Lawson)

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