Eurozone manufacturing sector hits 44-month high in February

Investing.com – According to the HCOB PMI survey released on Monday, the Eurozone manufacturing sector reached its strongest performance in nearly four years in February, with new factory orders growing at the fastest pace since April 2022.

The HCOB Eurozone Manufacturing PMI rose from 49.5 in January to 50.8 in February, marking the first time the index has surpassed the 50.0 growth threshold since last August.

This reading represents the most significant improvement in Eurozone factory activity since June 2022.

Among the eight monitored countries, six reported expansionary manufacturing PMI readings in February, the highest since November last year.

Germany recorded the most notable improvement in factory conditions in nearly four years, with a PMI of 50.9. France’s manufacturing economy stagnated after a strong rise in January, with a PMI of 50.1.

Spain and Austria were exceptions in February, with stagnation and marginal deterioration, respectively.

Greece led the rankings with a PMI of 54.4, followed by Ireland at 53.1, Germany at 50.9, the Netherlands at 50.8, Italy at 50.6, France at 50.1, Spain at 50.0, and Austria at 49.4.

Factory output levels in the Eurozone increased in February, marking growth in 11 of the past 12 months. The HCOB Eurozone Manufacturing PMI Output Index rose from 50.5 in January to 51.9, a six-month high.

During the latest survey period, Eurozone goods demand improved for only the second time in nearly four years, with the strongest expansion since April 2022. Export decline slowed to its weakest in three months.

Manufacturing employment in the Eurozone continued to decline, consistent with the trend since June 2023. The reduction in backlogs of work was the slowest in three and a half years.

Input costs rose sharply, accelerating for the third consecutive month to a 38-month high. Several respondents cited rising energy and metal prices, as well as the carbon capture adjustment mechanism introduced earlier this year.

Output prices increased for the second consecutive month, a situation rarely seen in nearly three years, with the latest rise being the most significant since March 2023.

Manufacturers in the Eurozone became more optimistic about growth prospects over the next year in February, with business confidence reaching a four-year high.

“It appears to be a broad recovery in the Eurozone manufacturing sector, with six of the eight surveyed countries now in expansion,” said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “Germany’s overall PMI surged significantly, returning to growth for the first time in three and a half years.”

Procurement activity approached stabilization in mid-first quarter, with contraction slowing for the second month in a row. Respondents reported delays in receiving procurement products from suppliers, marking nine consecutive months of extended delivery times.

Purchasing inventories further declined, but the rate of decrease was the slowest since the beginning of the current consumption trend in early 2023.

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