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Eurozone Private Activity Growth Moderates From Near 12-Year High

EurozonePMI-022118-lt.jpg

Eurozone private sector growth continued to be strong in February, albeit with the rate of expansion cooling from the near 12-year high seen in January, flash data from IHS Markit showed Wednesday.

The composite output index dropped more-than-expected to 57.5 from 58.8 in the previous month. The score was forecast to fall to 58.4. Nonetheless, a score above 50 indicates expansion.

The goods-producing sector continued to record a faster pace of expansion than the service sector in February.

The services Purchasing Managers' Index eased to 56.7 from 58.0 in January and also below the forecast of 57.6.

Similarly, the factory PMI slid to 58.5 from 59.6 in the previous month. The score was expected to fall moderately to 59.2.

The PMI readings indicate that the eurozone economy is expanding at a quarterly rate of 0.9 percent in the opening quarter of 2018, Chris Williamson, the chief business economist at IHS Markit, said.

With the currency bloc continuing to perform very well, Jessica Hinds, an economist at Capital Economics, said the European Central Bank will be comfortable ending its asset purchase programme later this year.

But with only limited signs of inflationary pressure and signs that the euro may be denting activity a little, the ECB is likely to strengthen its guidance that interest rates will not rise any time soon, the economist added.

By country, growth in Germany came in at a three-month low, and in France the composite PMI moderated to the weakest for four months. However, in both cases the PMI readings remained
at levels indicative of strong growth.

Germany's composite output index declined unexpectedly to 57.4 from January's 81-month high of 59.0. The reading was expected to rise to 59.2. The slowdown was driven by both services and manufacturing.

The services PMI declined more-than-expected to 55.3 from 57.3 a month ago. The expected level was 57.0.

Likewise, the manufacturing PMI came in at a 6-month low of 60.3 in February, down from 61.1 in January. The score was below the expected 60.5.

France's composite output index fell to 57.8 from 59.6 in January. The indicator signaled the slowest growth since October and stayed below the forecast of 59.2.

Rates of output growth softened in manufacturing and services sectors. The pace of expansion at manufacturers dipped below their service sector counterparts for the first time since November.

The services PMI slid to 57.9 in February from 59.2 in the previous month. The expected level was 59.0. The manufacturing PMI dropped to 56.1 from 58.4 a month ago. The reading was also below consensus 58.0.

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