LONDON (Reuters) – Euro zone business activity saw very tepid growth in February as demand fell at a faster pace and an expansion in services barely offset a long-running decline in manufacturing, a survey showed.
HCOB’s preliminary composite euro zone Purchasing Managers’ Index, compiled by S&P Global, held steady at January’s 50.2 in February, only just above the 50 mark separating growth from contraction.
A Reuters poll had predicted a small lift to 50.5.
“Economic output in the euro zone is barely moving at all. The somewhat milder recession in the manufacturing sector is only just being overcompensated for by the barely noticeable growth in the services sector, ” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“These figures therefore do not yet point to a recovery in the euro zone.”
Overall demand declined for a ninth straight month and at a faster pace. The composite new business index dropped to 48.6 from 49.3 last month.
The PMI for the bloc’s dominant services industry fell to 50.7 from 51.3 in January, confounding expectations in the Reuters poll for an uptick to 51.5.
Demand for services fell and some of the activity was generated by completing previous orders. The services backlogs of work index dropped to 46.7 from 48.0, its lowest reading since late 2020 when the world was in the grip of the COVID-19 pandemic.
A PMI for the manufacturing industry which has been sub-50 for approaching three years did, however, improve to 47.3 from 46.6. The Reuters poll had predicted a more modest lift to 47.0.
An index measuring factory output that feeds into the composite PMI jumped to 48.7 from 47.1.
But optimism among manufacturers remained strong despite the threat of tariffs from U.S. President Donald Trump. The future output index dipped to 59.6 from 60.5 but remained above its long-run average.
(Reporting by Jonathan Cable; Editing by Toby Chopra)
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