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Euro zone manufacturing picks up in August

Oli Scarff | Getty Images

Manufacturing activity in the euro zone rose to its highest level since June 2011 in August, as the sector expanded across the majority of countries in the region, including struggling Spain and Italy.

The Markit Manufacturing Purchasing Managers' Index (PMI) came in at 51.4 in August, compared to 50.3 in July. A reading over 50 marks expansion. New orders for manufactured goods grew at their quickest rate since May 2011, boosting hopes that momentum in the sector will continue.

(Read more: Euro zone exits longest recession in over 40 year)

Markit's senior economist Rob Dobson said that unlike in previous months, the data was not driven solely by Germany, with the manufacturing sectors in other countries also posting growth.

"We shouldn't take away from this number the fact that it's a 26-month high. The longest journey towards recovery starts with the smallest step," Dobson told CNBC. "What we've seen in the last couple of months - euro zone manufacturing expanding in both of these months - those are the first steps, hopefully, towards a more sustainable recovery."

The rate of expansion in manufacturing accelerated in Germany, where it hit a 25-month high, the Netherlands - a 27-month high - and Ireland, which it reached a 9-month high. Growth in the sector also resumed in Spain, after more than two years of decline, and picked up pace in Italy, fueling hopes of recovery in these two countries which have been battling long downturns brought on by the region's economic crisis.

Factory activity in Greece continued to contract in August, but at its slowest pace in more than three years. The only country not to post an improvement in manufacturing activity was France, where the PMI remained below 50, coming in unchanged at 49.7 in August.

(Read more: Weak euro zone jobs picture overshadows bright spot)

The PMI data came after the euro zone exited the longest recession in continental Europe in over 40 years in the second quarter, posting gross domestic product (GDP) growth of 0.3 percent quarter-on-quarter.

"The final August euro zone manufacturing PMI encouragingly shows widespread improvement across all countries except for France and is supportive to hopes that the single currency area is gradually establishing recovery after exiting prolonged recession in the second quarter," said Howard Archer, chief European economist at IHS Global Insight. "It is particularly welcome that that the improvement in manufacturing activity was widespread in August."

He added: "Looking ahead, the hope for manufacturers is that currently improving confidence in most euro zone countries will encourage businesses to invest more, and also encourage consumers to spend more, particularly on durable goods."

By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop

Contact Europe: Economy

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