Eurozone February final manufacturing PMI 47.6 vs 47.3 prelim

• Prior 46.6

Besides the drop in Spain, manufacturing activity across the region picked up in February with Germany of note seeing a reading that hit a two-year high. The sector remains in contraction but at least factory production is seen stabilising further to start the new year. It’s still too early to suggest a material turnaround in sentiment but baby steps I guess. HCOB notes that:

“It’s still too early to call it a recovery, but the PMI hints that the manufacturing sector might be finding its footing. New orders
are falling at the slowest pace since May 2022, and production is edging closer to stabilising. So, after almost three years of
recession, we could see a bit of growth in the coming months. A quick formation of a government in Germany, political
stability in France, and a deal with the US on key tariff issues would definitely help.

“Job cuts sped up in February, but it’s not uncommon for layoffs to continue even after a recession ends. So, this doesn’t
necessarily mean a recovery is far off.
“As for the four big eurozone countries, Spain is still showing growth in production, but its Manufacturing PMI, which has
been doing rather well for the past three years, dipped below the 50 mark due to declining new orders.

“Most companies are staying optimistic about the future. The confidence index is just above the long-term average. This is
surprising considering the tariff threats from the US, but companies know that a recession is usually followed by a recovery.
There are also signs that Russia’s war against Ukraine might end this year, and the expected political stabilisation in
Germany is certainly a positive element, too.”

This article was written by Justin Low at www.forexlive.com.