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Euro zone business growth picked up in February, but still weak - PMI

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By Reuters
Euro zone business growth picked up in February, but still weak - PMI
A businessman walks on the esplanade of La Defense, in the financial and business district in La Defense, west of Paris, April 10, 2014. REUTERS/Gonzalo Fuentes/File Photo   -   Copyright  Gonzalo Fuentes(Reuters)

By Jonathan and Cable

LONDON, March 5 (Reuters) – Euro zone business activity accelerated more than thought last month but remained lacklustre as a pick-up in services growth only partially masked a downturn in the bloc’s manufacturing industry, a survey showed.

IHS Markit’s Euro Zone Composite Final Purchasing Managers’ Index (PMI), considered a good measure of overall economic health, rose to 51.9 in February from January’s 51.0.

That was higher than an earlier flash reading of 51.4 but was close to the 50 mark separating growth from contraction.

“The survey remained subdued,” said Chris Williamson, chief business economist at IHS Markit.

“Measured overall, the survey shows the quarterly rate of GDP growth picking up to 0.2 percent in February from 0.1 percent in January, meaning the first quarter could see the euro zone economy struggle to beat the 0.2 percent expansion seen in the fourth quarter of last year.”

A Reuters poll last week predicted growth of 0.3 percent this quarter.

Euro zone manufacturing activity went into reverse for the first time in over five years last month, a sister survey showed on Friday, but a PMI covering the bloc’s dominant services industry bounced to 52.8 from January’s 51.2.

Although that beat an earlier flash estimate of 52.3, January’s reading matched December’s four-year low and so came from a low base.

“While the service sector is showing greater resilience, inflows of new business remained worryingly weak, providing little hope for any noticeable improvement in performance in the coming months,” Williamson said.

A new business index rose to a still-weak 51.4 from January’s more than four-year low of 50.1.

Suggesting they were operating with some spare capacity, firms did not build up a backlog of work last month. The composite sub-index was bang on the breakeven 50 mark, an improvement from January’s 48.3.

(Reporting by Jonathan Cable; Editing by Catherine Evans)