Eurozone Manufacturing Sector Contracts At Slowest Pace In A Year

Eurozone manufacturing activity contracted only marginally and at the slowest pace for the past year in February, final survey data from IHS Markit showed Monday.

The factory Purchasing Managers’ Index rose to 49.2 in February from 47.9 in January. This was slightly above the flash score of 49.1.

Although the PMI has recorded below the 50.0 no-change mark for 13 months in succession, February’s reading marked not only a one-year high, but also a second successive monthly rise in the index.

“Despite widespread reports from companies that the coronavirus outbreak disrupted supply chains and hit foreign sales, resulting in considerably longer lead times and a steepening drop in export orders, February saw encouraging signs that the eurozone’s manufacturing downturn is easing,” Chris Williamson, chief business economist at IHS Markit said.
Although country level PMI readings were generally higher in February, France PMI fell to a seven-month low and there was further worsening in Italy. The biggest manufacturing economy, Germany, also showed deterioration in performance.

Nonetheless, Germany’s manufacturing sector moved closer to stabilization in February, despite supply chain disruption. The PMI rose to a 13-month high of 48.0 in February, from January’s reading of 45.3.

The flash reading was 47.8. The survey showed slower falls in output, new orders and employment.

France’s manufacturing sector contracted for the first time in seven months. The PMI dropped to 49.8 in February from 51.1 in January but was above the flash 49.7. A key factor driving the downturn was a fall in new orders.

Italy’s manufacturing PMI dropped to 48.7 in February from 48.9 in January. Operating conditions deteriorated for the seventeenth straight month. The major reason for the deterioration was further reductions in output and new orders.

On the other hand, Spain’s manufacturing sector returned to expansion territory in February after contracting for eight straight months. The PMI rose to a 10-month high of 50.4 from 48.5 in January.

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