At 53.2 in February, the final seasonally adjusted Markit Eurozone Manufacturing PMI
(purchasing managers' index) came in above the earlier flash estimate of 53.0. Although
indicating a modest slowdown in the rate of expansion from January’s 32-month
high, this still confirmed that the manufacturing recovery had completed its
eighth successive month.
Growth was broad-based in February, with PMI readings for six out of the
seven nations for which data were available signalling expansion (the Greek
Manufacturing PMI is released on 4th March).
The Netherlands rose back to the top of the PMI league table and, along with
Ireland and Spain, was one of three nations to record a faster rate of expansion
than in January. Germany and Austria remained among the strongest performers,
despite seeing rates of improvement ease slightly over the month. Italy also
continued its recovery, despite its PMI dipping to a three-month low.
Although France remained at the foot of the
table, there was brighter news on this front as well. The France Manufacturing
PMI rose to a five-month
high of 49.7, up from the flash
reading of 48.5, making it the main contributor to the gain between the flash
and final eurozone PMI.
Eurozone manufacturing output, new orders and
new export business all rose for the eighth successive month in February. Rates
of expansion also remained solid in all three cases, despite losing some impetus
compared to the prior month.
All seven of the nations for which February
data were available reported higher levels of production and new export orders.
France was the only one of those nations to see a drop in total new orders,
although the pace of contraction was weaker than signalled by the earlier flash
The outlook for eurozone manufacturing
production also remained positive, with backlogs of work rising for the fifth
straight month and stocks of finished goods showing a further decline. Improved
demand and increased levels of work-in-hand encouraged further jobs growth, with
employment rising for the second successive month in February.
The pace of increase in payroll numbers
remained only modest, however, and was weaker than in the previous month. Rates
of job creation accelerated in Ireland (four-month high), Spain
(six-and-a-half-year record) and Austria (11-month high), but eased marginally
in Germany and Italy. Employment returned to growth in the Netherlands, but
declined in France.
On the price front, inflationary pressures
continued to subside in February. Average input costs declined slightly for the
first time in six months, reflecting (in part) lower energy prices. Input costs
fell in Germany and France, but rose in Italy, Spain, the Netherlands, Austria
and Ireland. Meanwhile, average output charges rose only marginally and at the
weakest pace since last October. A number of firms indicated that they were
still facing strong competition. The big-three nations of Germany, France and
Italy all reported higher selling prices, as did Austria.
Chris Williamson, chief economist at Markit
said: "The dip in the manufacturing PMI, its
first fall for five months, is a disappointment and a reminder of the hesitant
nature of the region’s nascent recovery. However, we should not lose sight of
the fact that this is the second-strongest reading that the eurozone has seen
for almost three years.
"Despite the February fall, the survey remains consistent with
industrial production growing at a robust quarterly rate of 1.0% in the first
quarter, meaning manufacturing is on course to provide a substantial boost to
the overall economy. Gross domestic product looks set to rise by 0.4-0.5% in the
first three months of the year, assuming the recovery does not lose further
momentum in March.
"With new orders and backlogs of work still rising at reasonable
rates, further ongoing expansion is signalled for coming months. Employment has
now also risen for two consecutive months, as firms seek to boost capacity in
the face of the brightening outlook. Job growth is still very weak though, and
manufacturing will not help bring about any rapid falls in the region’s
near-record unemployment rate any time soon.
"Policymakers will nonetheless be reassured that the trends in
manufacturing output and employment are moving in the right direction, and that
the recovery is broadening out. February was the first time for almost three
years that output rose in all four of the largest euro nations, as France eked
out a welcome return to expansion alongside surging growth in Germany and strong
increases in Spain and Italy."
The Eurozone Manufacturing PMI is
produced by Markit and is based on original survey data collected from a
representative panel of around 3,000 manufacturing firms. National data are
included for Germany, France, Italy, Spain, the Netherlands, Austria, the
Republic of Ireland and Greece. These countries together account for an
estimated 89% of Eurozone manufacturing activity.
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