According to the final report from S&P Global, activity in the eurozone manufacturing sector continued to contract in February, while the pace of contraction accelerated slightly compared to January. As for the inflationary situation, cost pressures faced by goods producers eased considerably once again, with the overall rate of input price inflation slowing to a marginal pace that was the weakest in almost two-and-a-half years.
The Eurozone Manufacturing PMI fell in February to 48.5 points from 48.8 points in January. The latest value confirmed the preliminary estimate and forecasts of economists. However, the index remains below the 50-point mark, which indicates a reduction in activity, for the eighth month in a row. S&P Global said that the drop in the index was caused by the deterioration of sub-components for suppliers’ delivery times and stocks of purchases, which offset the positive impact of the indices of production, new orders and employment. The data showed that manufacturing production stabilized in February after eight consecutive months of decline. Nevertheless, weak demand conditions continued to negatively affect production. New orders fell for the tenth month in a row, as a reduction in customer inventory, inflation and general economic uncertainty affected sales. Export orders also fell in February, while the rate of decline accelerated compared to January. Due to the improvement of conditions in the supply chain and a drop in order volumes, manufacturers have reduced both their purchases and stocks of raw materials. Meanwhile, stocks of finished goods fell for the first time since September 2021. Looking ahead, euro area manufacturers were slightly more optimistic towards the year-ahead outlook when compared to January. Future output expectations were at their most upbeat since Russia’s invasion of Ukraine around a year ago.