Eurozone: Composite PMI recovers somewhat on services activity in February
February 21, 2019
Leading data suggests that the Euro area’s economy remained soft in February. The Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, edged up to 51.4 from January’s 50.7—which had marked the worst result since July 2013. Despite the rise, the PMI still recorded one of the worst readings seen in the past five years. The composite PMI lies just above the 50-threshold that separates expanding business activity from contracting in the Eurozone.
The services PMI rose in February, driving the composite PMI’s marginal gain. However, the manufacturing PMI plunged into contractionary territory, recording the worst reading in over five years. New orders fell at the sharpest pace in nearly six years in the manufacturing sector, and output also recorded a steep decline. Employment, however, was a bright spot in the survey, increasing in the services sector and remaining steady in the manufacturing sector, while business sentiment was mixed across sectors.
Regarding the two largest Eurozone economies, Germany’s composite PMI revealed diverging dynamics in the region’s largest economy as the service sector recorded a marked acceleration in activity, while the manufacturing sector nosedived into contractionary terriroty. In contrast, France’s composite PMI was broadly stable. Elsewhere in the region, output growth dropped to the lowest level seen since November 2013.
Eurozone GDP Forecast
FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 1.5% in 2019, which is unchanged from last month’s forecast. For 2020, panelists also expect the economy to grow 1.5%.