By Simone Meier March 1 (Bloomberg) -- European manufacturing accelerated to the fastest pace in more than two years in February as reviving global demand boosted export orders. A manufacturing index for the 16-member euro region increased to 54.2 from 52.4 in January, London-based Markit Economics said today. That’s above an initial estimate of 54.1 published on Feb. 19 and the highest since August 2007. Manufacturing accounts for about a quarter of the economy and a reading above 50 indicates expansion. European companies are stepping up output to meet reviving global orders after governments spent trillions of dollars to encourage demand. In the U.K., the euro area’s biggest trading partner, manufacturing grew for a fifth month in February and a report later today may show that activity at U.S. factories also rose last month. “Global demand is increasing and the euro region is benefiting as a result,” said Christoph Weil, a senior economist at Commerzbank AG in Frankfurt. “Manufacturing will continue to show positive developments over the coming months while domestic demand will remain subdued.” The euro was little changed against the dollar after the data, trading at $1.3592 at 11:21 a.m. in London. The yield on the German 10-year benchmark bond rose 0.3 basis point to 3.12 percent. Global Recovery European companies may have to rely on emerging economies to bolster sales as rising unemployment and surging energy costs crimp domestic demand. Europe’s jobless rate remained at 9.9 percent in January from the previous month, the European Union statistics office in Luxembourg said today. That’s the highest in more than 11 years. Munich-based Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, on Feb. 5 forecast that Chinese auto deliveries will rise at least 10 percent this year after January sales more than doubled. Lafarge SA, the world’s biggest cement maker, said last month that it will focus on emerging markets to “benefit from the economic recovery.” U.S. manufacturing probably expanded for a seventh month, according to a survey of economists. The Institute for Supply Management’s index for the U.S., the world’s biggest economy, will be published later today. In China, manufacturing weakened last month, reducing the risk of overheating in the fastest- growing major economy. Euro Drop In Europe, the economy may fail to gather strength for most of 2010, expanding at 0.2 percent in the first, the second and the third quarters, the European Commission said on Feb. 25. In the year, the economy may grow 0.7 percent after shrinking 4 percent in 2009, according to the Brussels-based commission. The euro has declined 5.1 percent against the dollar this year on speculation the U.S. will recover faster and amid concern that Greece’s fiscal problems will spread to other countries. European Union Economic and Monetary Affairs Commissioner Olli Rehn said today that Greece must take more steps to cut the region’s largest budget deficit. “Given that risks related to macroeconomic and market developments are materializing, additional consolidation measures are necessary,” Rehn told reporters in Athens today. “I am sure that together we shall overcome these formidable economic and fiscal challenges.” A euro-area composite index based on a survey of purchasing managers in manufacturing and service industries probably held at 53.7 in February, Markit said last month. An index of services may have slipped to 52 from 52.5 in January. Markit will release the final numbers for both indicators on March 3. To contact the reporter on this story: Simone Meier in Dublin at smeier@bloombert.net

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