Eurozone: Eurozone business activity loses further momentum in February
February 22, 2016
Economic activity in the Eurozone private sector continues to lose momentum. The preliminary flash Eurozone Composite Purchasing Managers’ Index (PMI), elaborated by Markit, fell from a revised 53.6 in January (previously reported: 53.5) to 52.7 in February. The result came in below the 53.3 the markets had expected and marked the lowest reading since January of last year. According to Markit, “business activity in the Eurozone grew at the slowest rate for over a year in February and deflationary pressures intensified.”
The weaker result stemmed from slower growth in both the manufacturing and services sectors, which recorded their worst performances in 12 and 13 months, respectively. Meanwhile, order-book growth slowed in both sectors, causing backlogs of uncompleted work to remain broadly unchanged compared to the previous month. As a result, employment growth eased compared to January. In particular, services created jobs at the slowest pace since September, while growth in manufacturing jobs was the same as February last year. The survey showed that businesses continue to benefit from lower input prices. Accordingly, firms cut output prices aggressively, and the recorded the largest drop since February 2015.
Regarding the two largest Eurozone economies, the French Composite PMI fell into contractionary territory for the first time since January 2015, while the Composite PMI was at its lowest level in 7 months in Germany. The remainder of the region saw business activity growth at the slowest pace since February last year.
Author: Ricardo Aceves, Senior Economist