Eurozone’s manufacturing economy performed strongly in February

According to the report from IHS Markit, the eurozone’s manufacturing economy performed strongly in February as operating conditions improved to the greatest degree for three years. 

Seasonally adjusted headline PMI rose to 57.9, up from 54.8 in January and better than the earlier flash reading. The index was above the 50.0 no-change mark that separates growth from contraction for an eighth successive month. All three broad market groups recorded an improvement in operating conditions during February. Investment goods producers registered the strongest growth (the best since January 2018), followed by intermediate goods. Although consumer goods recorded comparatively modest growth, it was nonetheless its best performance since last September.

The headline eurozone manufacturing PMI was driven higher by sharper gains in both output and new orders, which in each case were the best since last October’s recent peaks. Higher exports were a key driver of overall new order gains, with latest data showing the strongest rise in new export trade since January 2018. A noticeable feature of February’s survey data was the continued lengthening of delivery times for inputs. Latest figures showed the second-greatest deterioration in lead times since data were first available nearly 24 years ago. 

Finally, confidence about the future continued to strengthen, with the latest survey showing that optimism hit its highest ever level (expectations data were first available in mid-2012). Growth projections were linked to hopes of a successful rollout of vaccination programmes and a resolution to the pandemic in the coming months.