The upturn in the Eurozone services sector extended to
seven months in February. Business activity and new orders rose at accelerated
rates which were the sharpest in the current sequence of recovery, as domestic
markets improved in most of the nations covered. Companies also maintained a
positive outlook, with business confidence staying close to January’s
two-and-a-half year peak.
Services Business Activity Index
rose to a 32-month high of 52.6 in February, up from 51.6 in January and above
the earlier flash estimate of 51.7. All of the nations included in the survey
made positive contributions to the upgrade of the final February index reading
(compared with earlier flash data), with the largest shares provided by Italy
Ireland recorded the steepest expansion of business
activity for the twelfth month running, despite seeing its rate of increase ease
to the lowest since last November. Germany was second-placed overall, with
growth improving to a 32-month record. Italy returned to expansion following
declines in the prior three months, and the recovery continued in Spain (albeit
at a slower pace).
Markit said France was the only nation to report a
contraction in business activity. New business also fell again, having improved
only once in the past two years (September 2013), mainly reflecting weak demand
in the French domestic market.
Service sector employment was broadly unchanged in
February. Stronger job creation in Germany and Ireland was offset by accelerated
losses in France and Italy and a return to cuts in Spain.
A number of firms indicated that payroll headcounts had
been reduced in order to control costs in light of strong competition. This
reflected the ongoing discounts many firms were offering to stimulate new
business, as highlighted by average selling prices falling again in February.
Output charges decreased in France, Italy, Spain and Ireland, but continued to
rise in Germany.
Average input prices rose again in February, with
increases signalled in all of the nations covered. However, the overall rate of
inflation slowed since January and remained below the average for the current
sequence of increases.
The Eurozone Services PMI (Purchasing Managers'
Index) is produced by Markit and is based on original survey data collected from
a representative panel of around 2,000 private service sector firms. National
data are included for Germany, France, Italy, Spain and the Republic of Ireland.
These countries together account for an estimated 78% of Eurozone private sector
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