Euro zone business activity showed slight signs of improvement in February – PMI

The euro zone services PMI jumped to 50.0 in February from January’s 48.4, strongly overshooting consensus for 48.8, while manufacturing PMI dropped to 46.1 in February from 46.6 previous month beating expectations for a rise to 47.0.

Better than expected services numbers, after the index stayed below 50 threshold since July 2022, brought a dash of optimism on signals that a downturn in bloc’s business activity eased in February and partially offset negative results from manufacturing sector.
The Eurozone economy stagnated during past year, with weak performance of Germany, EU’s largest economy, seen as key contributor to economic slowdown, with fresh negative signals coming from sharp deterioration in German manufacturing sector this month.

Economist remain cautiously optimistic on encouraging data but warn that the economy will continue to struggle to fully return to recovery track in 2024.
The outlook is also brightening, as the bloc’s economy managed to gain traction, boosted by EU’s recovery fund, created to drive post-pandemic growth.

Slightly better overall figures add to hopes that the European Central Bank may start easing its monetary policy soon, as interest rates are at historic high and weigh on economic growth, though recent unexpected spike in inflation cools the expectations and adds to the central bank’s firm stance in fighting inflation and pushing it towards 2% target.