The manufacturing PMI print rose to a 13-month high in February
However, the actual details are not so pretty or at least not as encouraging as what the rebound in the headline suggests.
Nearly half of the index's month-on-month gain was attributable to a deterioration in supplier delivery times, which is linked to supply chain disruption from the coronavirus outbreak in China. Markit also highlights that in the report:
The 'flash' seasonally adjusted Suppliers' Delivery Times Index was at 47.0 in February, down from 55.1 in January. A reading below 50 signals deterioration in supplier delivery times. In the calculation of the headline Manufacturing PMI, the supplier delivery times index is inverted.
Although there are positive signs with manufacturing output and new orders showing slower rates of decline, but it wasn't to say that there was significant improvement in those key areas that led to the strong reading today.
The euro can still take heart in the release no doubt, as it is doing now with EUR/USD rising to 1.0820 and just settling around 1.0813 currently.
But this isn't to say that the coronavirus isn't having an impact at all nor does it suggest a confirmed recovery in the German and euro area economy just yet.
Update: A bit of backstory here to the supplier delivery times index and why it is inverted (h/t @ QuantmSC2). This bit is particularly interesting:
"The Supplier Deliveries Index is a leading indicator and predictor of future growth or contraction. A rising Supplier Deliveries Index over time usually signals future supply problems. A decreasing Supplier Deliveries Index usually signals increased supply availability - and possibly decreased economic activity. If this index is not in sync with the direction of the PMI® or NMI®, one should not jump to conclusions until it is."
