Eurozone recovery regained pace in February despite soaring prices: PMI


London — Research shows that eurozone economic recovery regained momentum this month as COVID-19 deregulation boosted the block’s dominant service industry, but consumers saw prices rise at record speeds. Faced.

As a variant of Omicron COVID-19 spread throughout Europe, some governments have re-imposed measures to curb its spread.

Seen as a guide to overall economic health, IHS Markit’s Flash Composite Purchasing Managers’ Index jumped from 52.3 in January to a five-month high of 55.8 in February, hitting a median of 52.7 predicted by Reuters. It was significantly higher.

Andrew Kenningham of Capital Economics said:

“The eurozone economy, which returned to pre-pandemic levels in the fourth quarter of 2021, could expand at a reasonable pace in the first quarter of this year, and as tourism, travel and hospitality return to normal, the following: It should accelerate in two quarters. “

The service industry’s flash PMI has skyrocketed from 51.1 to 55.8. This was a five-month high, and Reuters polls predicted a slight increase to 52.0. Anything above 50 indicates growth.

Improvements in service demand pushed Germany’s overall private sector business activity to a high level for the first time in six months, but in France growth was stronger than expected, supported by improved conditions for COVID-19.

In the UK, the private sector is recovering at the fastest pace since June 2021 as spending on travel, leisure and entertainment increased after COVID-19 cases were alleviated outside the common currency area and the European Union. did.

The factory entered a stronger month, with the Flash Eurozone manufacturing PMI only dropping from 58.7 in January to 58.4, which was expected in a Reuters poll. Index measurement output fed to a composite PMI fine-tuned from 55.4 to 55.6.

Activity may have been faster, but protracted supply chain bottlenecks and fast-growing demand meant that factories couldn’t keep up, and the backlog of the work index rose from 56.9 to 58.7. ..

Optimism has improved altogether, hoping that the economy will resume and the worst of the pandemic will end. The service business expectation index rose from 67.2 to 68.7.

“The positive indicators were also promising, as sentiment a year ahead of February rose to the strongest since June 2021,” said Ricardo Amaro of Oxford Economics.

“A weak start this year means that eurozone GDP growth is likely to remain modest in the first quarter, but today’s PMI results are in the second quarter. Consistent with expectations that strong growth will resume. “

Since IHS Markit began collecting data in late 2002, economic recovery has been seen despite the fastest rise in overall prices charged by businesses. The combined output price index rose from 61.9 to 62.7.

Inflation in the euro area hit a record high in January, and the European Central Bank is under increasing pressure to tighten monetary policy. Last week’s Reuters poll suggested that banks would raise deposit rates later this year and wouldn’t wait until 2023, as previously expected. [ECILT/EU]

“PMI suggests that the winter recession may be much milder than expected, labor market pressures continue to rise, and the impact of the second round is broader at this point. There is price pressure, “says ING’s Bert Colijn.

“This is expected to increase hawkish pressure ahead of the European Central Bank’s March meeting.”

Jonathan Cable

Reuters

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