Eurozone growth reaches six-month high in February - IHS Markit

According to the report from IHS Markit, the Eurozone PMI Composite Output Index was unchanged on the earlier flash reading in February, recording a level of 51.6. That was an improvement on January's 51.3 and signalled the strongest expansion of the euro area's private sector economy in six months.

Slightly stronger growth was supported by a solid and firmer gain in service sector activity, alongside a weaker contraction of manufacturing production. Although goods producers recorded a fall in output for a thirteenth successive month, the degree to which production fell was the weakest since May 2019.

Levels of new business received by euro area private sector companies increased for a third month in succession. Growth, however, remained modest, undermined by an ongoing contraction in exports. Indeed, latest data showed a seventeenth successive monthly fall in new work from abroad.

In line with the trend since November 2014, staffing levels continued to rise. However, the latest rate of growth was modest, and unchanged since the previous month. Moreover, whilst gains in employment were seen across the region, rates of growth varied, ranging from a negligible rise in Germany to marked gains in France.

Meanwhile, prices data indicated another solid rise of average input costs. Inflation was again mainly driven by rising employment expenses in the services economy as manufacturers registered another reduction in their input costs. Firms did, however, struggle to pass on increased prices to their clients. Although output charges continued to rise, they again did so only modestly.

Business confidence regarding future activity was a little lower than January's 16-month high during February. There were reports from across the region of worries over the impact on business from an escalation of the Covid-19 outbreak. German companies remained the least optimistic, whilst those in Ireland were the most confident.