The February reading on the RBS/NTC Eurozone Manufacturing PMI - Purchasing Managers' Index - (a composite indicator designed to provide a single-figure summary of business conditions across the eurozone) registered 52.3 . The PMI was in line with the earlier flash reading and down from 52.8 in January, signalling a slight weakening in the rate of expansion to the second weakest level registered in the past two-and-a-half years. PMI readings among the big-four euro nations showed the widest variation for seven-and-a-half years, with continued solid growth in Germany and, to a lesser extent, France contrasting with near-stagnation in Italy and an accelerating rate of contraction in Spain. The PMI for Italy hit a two-and-a-half year low while Spain saw the sharpest rate of contraction since December 2001.
Of the big-four countries, only Germany saw an acceleration in output growth, with German manufacturing activity weakening slightly in February - to 54.3 from 54.4 in January - but remaining robust, with employment growth holding near the strongest level on record. NTC said its measure of employment growth in the manufacturing sector fell to 55.3 in February, just below January's 55.6, which was the highest since the survey began in April 1996. A gauge of output advanced to 56.0, the highest since September, from 55.7.
However, there were signs the pain being caused to exporters by the strong euro was worsening, and the index of new export orders slipped to 52.5 from 52.7 while a measure of input prices jumped to 65.1, the highest since July, and up from 62.8 in January. So factory gate price inflation is on the way up as manufacturers evidently seek to pass through some of their higher raw material and energy costs to clients.
German services Purchasing Managers' Index rose to 52.2 in February from 49.2 in January, and the index reading was the highest for three months. Tim Moore, economist at NTC Economics said “German service sector activity expanded at a below-trend pace in February, despite service providers registering an improvement in new business volumes for the first time in three months.”
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