According to the report from HCOB, business activity in the private sector of the eurozone increased markedly in February, reaching the highest level since June 2023, as a stabilization of output in the service sector offset a further steep downturn in manufacturing.
The Eurozone Composite PMI Output Index rose in February to 48.9 points from 47.9 points in January. However, the index remains below the 50-point mark, which indicates a reduction in activity in the private sector, for the ninth month in a row. Economists had expected the index to rise to 48.5 points. The services PMI rose to 50.0 points (7-month high) from 48.4 points in January, while the manufacturing PMI fell to 46.1 points (2-month low) from 46.6 points. Economists had expected the services PMI to rise to 48.8 points and the manufacturing PMI to reach 47.0 points.
HCOB said that the manufacturing output across the eurozone fell again (for the 11th month in a row), while the rate of decline accelerated compared to January. New orders in the manufacturing sector fell sharply by historical standards, while the rate of decline in the service sector slowed again (for the 4th month in a row). Similarly, while export orders fell for both goods and services, a steepening rate of decline in the manufacturing sector contrasted with a moderation in export losses in the services economy. Private sector employment rose for the second month in a row after a two-month decline at the end of 2023. Although the overall increase in employment was only slight, the latest increase was nevertheless the largest since July last year. Supplier delivery times had lengthened for the first time in 12 months in January, largely due to Red Sea related shipping disruptions, but faster lead-times were reported in February in a welcome sign of fewer shipping delays. The data also showed that growth of average input costs in the private sector accelerated for a second successive month and reached the highest since last May. Selling price inflation likewise accelerated, up for a fourth month running in February to also hit the highest since last May. Meanwhile, business optimism about the coming 12 months improved for a fifth successive month, rising to the highest since last April.