Eurozone factory output returns to growth in February: PMI

LONDON—Overall activity in the eurozone’s manufacturing sector contracted again in February, but output rose for the first time since May as supply chains continued to recover, a survey showed on Wednesday.

The S&P Global Final Manufacturing Purchasing Managers Index (PMI) fell to 48.5 in February from 48.8 in January. This is in line with preliminary figures, but still below 50, the dividing line between growth and contraction.

But the index that measures output that feeds into the composite PMI scheduled for Friday, seen as a good guide to overall economic health, broke even at 50.1 compared with 48.9 in January. slightly higher.

“Eurozone manufacturers reported a modest increase in output in February, the first increase since May last year and the one seen in October,” said Chris Williamson, chief business economist at S&P. This is welcome news, representing further improvement in the underlying trend from the trough.” global.

“The positive production situation reflects, first and foremost, broader improvements in the supply chain, with deliveries of inputs to factories averaging faster than they have been seen since 2009.”

With supply chain tensions restored, the cost burden faced by factories has been significantly reduced. The Input Price Index plummeted to 50.9 from 56.3 in January to its lowest since September 2020. However, the output price index remained high.

“Factory sales prices continue to rise sharply, but the rate of increase has settled to a two-year low,” Williamson said, adding that this is the usual lagging effect of cost changes on production prices. It partially reflects the

The European Central Bank will be welcomed by policymakers at the European Central Bank, which failed to bring inflation closer to its 2% target despite embarking on the most aggressive rate hike policy since the bank’s founding.

Economists polled by Reuters say a further 50 basis points rise in the ECB’s deposit rate this month is a completed deal, with another 25 basis points higher next quarter expected to take the final rate to 3.25%. doing.