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A worker welds in a factory in Gravellona Lomellina, Italy, on June 11, 2013.Reuters

Euro zone manufacturing activity contracted for a 10th straight month in November although the bloc’s battered factories may have turned a corner as forward-looking indicators in Monday’s survey appear to have passed a nadir.

IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) has been below the 50 mark separating growth from contraction since February, but at 46.9 it was above October’s 45.9 and higher than a preliminary estimate of 46.6.

An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good gauge of economic health, rose to 47.4 from 46.6.

“Although still signalling a steep rate of decline, the manufacturing PMI nonetheless brings some encouraging signals which will fuel speculation that the worst is over for euro area producers,” said Chris Williamson, chief business economist at IHS Markit.

New orders, employment, raw materials purchases and backlogs of work all declined at a shallower rate, while optimism staged its biggest one-month bounce in over six years. The future output index leapt to 55.3 from 51.9.

“Perhaps most promising is a marked upturn in business sentiment, particularly in Germany,” Williamson said.

Germany, Europe’s biggest economy, is going through a soft patch but is on track to grow 0.2 per cent this quarter, the Ifo economic institute said last week. Its export-dependent manufacturing sector contracted at a slower pace for the second month in a row in November, the German factory PMI showed earlier.

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