Composite euro area output PMI edges past forecasts in February
Economic activity in the euro area picked-up a tad in February, in particular thanks to a more buoyant services sector in Germany, but growth overall was muted, economists said, with manufacturing entering its first downturn in almost six years, according to the results of the most closely-tracked surveys.
The news came as investors were trying to better gauge just how long the current slowdown might last and its extent and what the European Central Bank's policy response might be.
According to preliminary survey results, IHS Markit's so-called composite output Purchasing Managers' Index, which covers both services and manufacturing, rose from 51.0 for January to 51.4 in February, edging past forecasts for an increase to 51.3.
That was thanks to an unexpected pick-up in euro area services, for which the corresponding PMI jumped from 51.2 to 52.3 (consensus: 51.5), as activity in Germany picked-up while in France it was down only fractionally, the survey compiler said.
Yet on the factory side of things, the euro area PMI dropped from 50.5 to 49.2, which was significantly weaker than the reading of 50.3 that economists had been anticipating, with order books shrinking at an accelerating pace.
"Weaker order books were linked to a combination of intensifying headwinds and concerns, including global trade protectionism worries, Brexit, the downturn of the auto sector, increased political uncertainty and anxieties regarding the broader economic outlook," IHS Markit said in a statement.
The German manufacturing PMI was especially weak, slumping from 49.7 to 47.6.
Total output growth, outside of Germany and France, was only "modest", running at its softest pace since 2013, with the survey data "suggesting" a rate of euro area GDP growth of not much more than 0.1% over the first three months of 2019 and of 0.2% in Germany.
"Solid domestic demand in many countries, notably Germany, continued to help support service sector growth and offset the downturn of the manufacturing sector. However, the overall rate of service sector growth remained relatively moribund compared to that seen throughout much of last year," IHS Markit's chief business economist, Chris Williamson, explained.
"Price pressures have meanwhile continued to ease alongside the more subdued demand environment."