Eurozone Factory Activity Slump Eases

(RTTNews) - Eurozone manufacturing sector remained in contraction in February, but the downturn was the least marked since early 2023, final survey results from S&P Global showed on Monday.

The HCOB manufacturing Purchasing Managers' Index rose to a 24-month high of 47.6 in February from 46.6 in January. The flash reading was 47.3.

The score signaled the smallest deterioration in the health of the euro area manufacturing industry since early-2023.

"It's still too early to call it a recovery, but the PMI hints that the manufacturing sector might be finding its footing," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

Output declined at the softest pace in nine months, reflecting a diminished drag from demand. New orders dropped at the weakest pace in almost three years.

Manufacturers were less aggressive with their purchasing reductions. Backlog clearances continued but the progress slowed. Factories continued to reduce their workforce. The rate of job cuts reached its most substantial level in four-and-a-half years.

Cost pressures among factories intensified as the rate of input price inflation rose to a six-month high. At the same time, output charges were discounted marginally since January.

The outlook for factory production over the next twelve months remained positive. The level of optimism was among the highest seen since Russia's full-scale invasion of Ukraine three years ago.

Of the big-four economies, Germany, France and Italy continued to contract but posted softer rates of decline during February. Meanwhile, Spain logged a decrease in the health of its manufacturing industry for the first time in just over a year.

Germany marked the slowest rate of contraction in more than two years. The HCOB final manufacturing PMI advanced to 46.5 from 45.0 in the previous month. The flash score was 46.1.

Similarly, the French manufacturing PMI rose to a nine-month high in February. The index registered 45.8, up from 45.0 in January and also above the initial score of 45.5.

Italy's manufacturing sector remained mired in a downturn, but signs of softening emerged in February. The factory PMI rose to 47.4 in February from 46.3 in January.

Spain's manufacturing sector contracted for the first time in more than a year in February. The factory PMI logged 49.7, down from 50.9 in the previous month.