• Prior 50.8
  • Manufacturing PMI 48.5 vs 49.3 expected
  • Prior 48.8
  • Composite PMI 52.3 vs 50.6 expected
  • Prior 50.3

The euro area economy is seen posting a modest growth recovery in February, up to a nine-month high in fact. Of note, rising demand, healing supply chains, order book backlog reduction and improved confidence underpinned the upturn with employment also continuing to rise. S&P Global notes that:

“Business activity across the eurozone grew much faster than expected in February, with growth hitting a ninemonth high thanks to resurgent service sector activity and a recovering manufacturing economy. February’s PMI is broadly consistent with GDP rising at a quarterly rate of just under 0.3%.

“Growth has been buoyed by rising confidence as recession fears fade and inflation shows signs of peaking, though manufacturing has also benefitted from a major improvement in supplier performance.

“The pandemic-related delivery delays that dogged factories over the past two years have given way to faster delivery times, in turn meaning pricing power is shifting from suppliers to factory purchasing managers, bringing industrial price inflation down.

“However, although inflationary pressures have continued to moderate in February, the survey hints at persistent elevated price trends in the service sector, linked in part to higher wage growth, which will concern ECB policymakers.

“The combination of accelerating growth and stubbornly elevated price pressures will naturally encourage a bias towards further policy tightening in the months ahead.”