Euro area factory activity continued to contract in February despite production ending an eight-month sequence of decline amid the easing supplier bottlenecks and improved raw material availability, final survey data from S&P Global showed Wednesday.
The manufacturing Purchasing Managers' Index, or PMI, fell to 48.5 in February from 48.8 in January.
The reading came in line with the flash estimate. A score below the neutral 50.0 suggests contraction in the sector.
The survey showed that production broadly stabilized in February partly due to the improvements in the supply of raw materials and speedier deliveries from vendors.
However, new orders declined for a tenth successive month as client destocking, inflation and general economic uncertainty weighed on sales performances. Further, euro area manufacturers reduced both their purchases and stocks of inputs in February.
There was a notable slowdown in input cost inflation. Purchase prices grew at the weakest pace since September 2020. At the same time, factory gate charges rose at the softest pace in two years.
Manufacturers were slightly more optimistic towards the year-ahead outlook. Positive outlook supported another month of hiring. Employment increased at the fastest rate in four months.
Italian goods producers recorded the quickest improvement in operating conditions and Spain posted marginal month-on-month growth.
Meanwhile, the "core" of the euro area, Germany and France reported PMI readings below the 50.0 threshold.
Germany's manufacturing activity contracted the most in three months in February due to the sustained slump in new orders. The S&P Global/BME final factory PMI fell to 46.3 in February from 47.3 in January. The score was also below the flash estimate of 46.5.
Reflecting declines in new orders and output, France's manufacturing activity fell into the contraction zone in February. At 47.4, the factory PMI dropped from 50.5 in January and remained below the initial estimate of 47.9.
Operating conditions in Italy's manufacturing activity was the best recorded by the survey for ten months. There was a marked rise in output and new orders recovered despite a fall in export business. The manufacturing PMI rose more-than-expected to 52.0 from 50.4 in the previous month. The expected score was 51.0.
Spain's manufacturing sector expanded for the first time since June last year amid fresh upturns in production and employment. The index posted 50.7 in February, up from 48.4 in January.
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