Surveys Give Hope On Eurozone Growth

The latest business surveys, measuring activity in the manufacturing and services sector for the eurozone painted a mixed picture.

The overall outlook, however, was one that gave hope of a revival in growth for the region.

Last week, IHS Markit released the manufacturing and services PMI numbers for February. It was a mixed bag, with manufacturing activity staying weak, but services activity showing a strong rebound.

As a result, the IHS Markit’s eurozone composite PMI rose to 51.9 in February. This was a higher than expected reading after preliminary results showed that the composite PMI rose to 51.4.

In January, the composite PMI came in at 51.0. Most of the gains in the composite PMI came from increased activity in the services sector.

Eurozone Manufacturing Contracts

Eurozone Manufacturing PMI

Eurozone Manufacturing PMI (February). Source: IHS Markit

Manufacturing activity in the eurozone reversed course for the first time in 5 years. This comes as trade war concerns, global growth slowdown, and Brexit remain the largest risks to growth in the eurozone.

Data from IHS Markit covering the manufacturing activity for February showed a downbeat report signaling a slowdown in Germany. Europe’s largest economy seemed to drag down the growth for the entire economic bloc.

The slowdown comes as ECB officials weigh the prospects of relaunching further easing measures to shore up stimulus. It comes just under two months after the central bank ended its 2.6 trillion euro quantitative easing stimulus program.

IHS Markit’s February manufacturing PMI report released just under two weeks ago showed that activity fell to 49.3 in February. This is in comparison to January’s reading of 50.5. A result above 50 on the PMI indicates expansion in the sector.

With February’s PMI activity falling to 49.3, it signaled that the euro zone's manufacturing activity was contracting.

Earlier, data from Germany showed that factory growth had contracted for the second consecutive month. Meanwhile, activity in other major economies such as France and Spain showed that activity slowed. Spain’s manufacturing sector fell below the 50-level for the first time in nearly five years.

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