Eurozone February final manufacturing PMI 58.2 vs 58.4 prelim

The reading just reaffirms positive signals with regards to euro area manufacturing last month, as stronger demand and fewer supply issues (delivery delays) helped to spur output growth. Markit notes that:

“Don’t let the drop in the headline PMI distract from what should be viewed as a largely positive month for the euro area manufacturing sector in February. Demand for goods is trending higher, with the rate of expansion accelerating to a six-month high. Underlying sales conditions are clearly strengthening as Europe overcomes the Omicron wave of COVID-19 and businesses step up their recovery efforts.

“Another positive move was in the suppliers’ delivery times gauge, which moved up during February to its highest since the beginning of last year – signalling the least marked deterioration vendor performance since then. It was actually this move that pulled the headline PMI lower, but tentative signs of stabilisation across supply chains is a good thing because it will help production capacities increase and is what we need to see for inflation to cool.

“Inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term is still running extremely hot, however, and price setters clearly carry substantial pricing power still. Strong demand for inputs, coupled with scarce supply, continues to drive vendor prices higher. In turn, firms are passing higher costs on to their clients. Although there was some welcome easing in input cost and output price inflation rates in February, they are both still among the fastest ever seen.

“Now, the Russia-Ukraine situation, which also carries the risk of dampening growth, adds fresh fuel to inflation risks, and we’ve seen brent crude already moving higher in response. It’s going to take prudent macroeconomic policy management to re-anchor inflation expectations without denting the demand recovery too heavily.”