• Composite PMI 50.3 vs 50.2 prelim

This reaffirms that euro area business activity returned to growth in January as the economy continues to display remarkable resilience through the winter months. S&P Global notes that:

“A resumption of business output growth, even marginal, is welcome news and suggests that the eurozone could escape a recession. With price pressures down markedly in recent months, supply constraints easing and near-term energy market worries alleviated by subsidies, lower prices and a warm winter, business confidence has also lifted higher, adding to hopes that the upturn will gather steam in the coming months.

“However, it remains too early to completely disregard recession risks. In particular, the impact of higher interest rates on economic growth has yet to be fully felt, and many companies are relying on backlogs of previously placed orders, accumulated during the pandemic, to sustain growth. Demand growth needs to accelerate to drive a more robust upturn, and it is worrying in that respect to see new orders continue to fall in January.

“It therefore remains to be seen whether the eurozone can build on the marginal expansion seen in January or whether we might see a repeat of 2012, when an encouraging return to growth at the start of the year proved fragile and gave way to a fresh downturn.”