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Eurozone manufacturing upturn remains robust in February

Staff Writer | March 8, 2018
The eurozone manufacturing sector continued to expand at a robust pace in February.
Eurozone manufacturing
Europe   IHS Markit Eurozone Manufacturing PMI
Although rates of increase in output and new orders eased further from the highs reached before the turn of the year, the sector is still enjoying one of its best growth spells over the past 18 years.

The final IHS Markit Eurozone Manufacturing PMI eased to a four-month low of 58.6 in February, down from 59.6 in January, better than the earlier flash estimate of 58.5 and well above its long-run average of 51.8.

The PMI has remained above the 50.0 nochange mark, signalling expansion, for 56 months.

The upturn remained broad-based by sector, with growth seen across the consumer, intermediate and investment goods industries.

The strongest rate of increase was signalled by the PMI for the investment goods category, followed by intermediate goods and then consumer products.

However, rates of increase eased across all three sectors.

National PMI data also highlighted the broad-base of the upturn, with expansions seen in all of the countries covered.

Growth was led by the Netherlands (survey record expansion), Germany and Austria.

Although rates of increase eased in the latter two, and also in France, Italy and Ireland, growth was robust across the board.

Spain and Greece both saw faster expansions, with Greece registering its best pace of improvement for 18 years.

February saw a further marked increase in manufacturing production, albeit the slowest since last October.

There were signs that output growth may ease further in the coming months.

New orders and new export business both rose at weaker (albeit still solid) rates.

The latter reflected, at least in part, the impact of the recent appreciation in the euro exchange rate.

The upturn still maintained sufficient momentum to test capacity, however, leading backlogs of work to rise for the thirty-fourth successive month in February.

Although the pace of increase slowed to a seven-month low, it stayed well above the series average.

Rising levels of work-in-hand (but not yet completed) encouraged job creation at euro area manufacturers.

The rate of expansion in employment was only slightly below the survey-record highs achieved in November and December of last year.

Jobs growth was registered in all of the nations covered, with especially marked gains seen in the Netherlands, Germany and Austria.

Greece was the only country to see a faster increase, with employment rising at a series-record pace.

Input price inflation across the eurozone manufacturing sector eased from January’s 81- month high in February, but remained marked overall.

In contrast, average output charges rose at the quickest pace in almost seven years.

Rates of increase in both price measures were higher in the intermediate and investment goods sectors compared to consumer goods producers.

Business confidence remained strong in the euro area manufacturing sector during February.

Although the overall degree of positive sentiment eased slightly, it remained close to January’s series-record high.

Optimism improved in France, Italy and Greece, and held steady at a record high level in the Netherlands.