Eurozone recovery accelerates in February: PMI data

Economic growth in the eurozone accelerated in February, hitting a nine-month high according to the closely watched S&P PMI Output Index.

Data from the survey released on Tuesday showed the indicator at 52.3, up from 50.8 in January. A value above 50 indicates economic growth.

Production in the single currency bloc reversed in January after a slump linked to supply chain disruptions, the Covid pandemic and the war in Ukraine.

With inflation still high but declining and China reopening its economy after strict Covid lockdowns, European growth has returned, raising hopes that the eurozone will avoid a plunge into recession.

“Business activity across the eurozone grew much faster than expected in February,” said Chris Williamson, chief operating officer at S&P Global Market Intelligence.

The higher reading for the Purchasing Managers’ Index (PMI) would coincide with euro-zone economic growth of just under 0.3 percent in the first quarter of this year, he said.

But the combination of faster growth and still high, albeit declining, inflation will encourage the European Central Bank to raise interest rates further, he warned. The ECB has hiked rates five times since July 2022 and has signaled it plans to continue doing so in March and likely beyond.

France’s central bank governor Francois Villeroy de Galhau on Friday described efforts as a “long-distance race” to bring inflation down to the ECB’s 2 percent target.

“Growth has been fueled by rising confidence as recession fears fade and inflation shows signs of peaking, although manufacturing has also benefited from a significant improvement in supplier performance,” Williamson said.

“The pandemic-related delivery delays that have plagued factories over the past two years have given way to shorter delivery times, which in turn means that pricing power is shifting from suppliers to factory purchasing managers and industrial price inflation is being reduced.” Eurozone recovery accelerates in February: PMI data

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