Eurozone economic growth eases in February
Economic growth in the eurozone eased a little in February, according to data released on Monday.
IHS Markit's composite purchasing managers' index, which measures activity in the services and manufacturing sectors, fell to 57.1 from January's near 12-year high of 58.8. This was below the flash estimate of 57.5 but well above the 50.0 mark that separates contraction from expansion and the series average of 53.0.
Meanwhile, the services PMI came in at 56.2, down from the flash reading of 56.7 and from January's near ten-and-a-half year high of 58.0. Still, it was above the long-run average of 53.2.
In France, the composite PMI slipped to 57.3 from 59.6 in January and the flash estimate of 57.8, while the German PMI rose to 57.6 from the flash estimate of 57.4, but was still well below January's reading of 59.0.
Chris Williamson, chief business economist at IHS Markit said: "The eurozone economy looks to have hit a speed bump in February after a stellar start to the year. It’s too early to read too much into the February fall in the PMI, and some pull-back from January’s high was always on the cards.
"It’s more appropriate to look at the elevated levels still being recorded by the surveys. So far this year, the PMI is indicating that the eurozone is on course for the strongest quarterly expansion for 12 years, consistent with GDP rising at a buoyant quarterly rate of 0.8-0.9%."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Looking beyond the plethora of numbers, the main story is that growth in the euro area’s private sector remains strong, but that momentum eased slightly in February following a very strong start to the year. Output and new orders growth slowed across the board, but work backlogs and employment continued to rise. In addition, input and output price pressures remained strong as firms struggled to meet demand, especially in manufacturing."
Oxford Economics said the final services numbers point to a significant slowing of activity in February. "What is less obvious is whether this merely reflects a response to the heightened political uncertainty in Germany and Italy," it said.
"Overall, this is consistent with our view that while sentiment across most eurozone countries has topped out, new orders, job creation and price pressures remain elevated, in line with our current Q1 GDP forecast of 0.6% for the eurozone. A downside risk is the US’ decision to impose tariffs on steel and aluminium imports, as a potential trade war could dent confidence and lead to lower growth than currently indicated by the PMIs."