LONDON: The euro zone’s manufacturing boom slowed a little further last month but factories across the bloc still appear to be enjoying their best growth spell in almost two decades, a survey showed on Thursday. Evidence the recovery remains robust and widespread, alongside price pressures at a near seven-year high, will be welcomed by policymakers at the European Central Bank as they move closer to unwinding their ultra-easy monetary policy.
IHS Markit’s final manufacturing Purchasing Managers’ Index for the euro zone fell to 58.6 in February from 59.6, just pipping an earlier flash estimate of 58.5 and comfortably above the 50 mark that separates growth from contraction.
An index measuring output, which feeds into a composite PMI due on Monday fell to 59.6 from 61.1, but was also above its flash estimate.
“The average PMI for the first quarter so far is the second-highest since the spring of 2000, falling just short of the near-record peak seen in the fourth quarter of last year,” said Chris Williamson, chief business economist at IHS Markit.
“The broad-based nature of the upturn is especially welcome, with all surveyed countries reporting solid rates of expansion.”
That robust growth came despite a sub-index measuring output prices rising to 58.4 from 58.0, its highest reading since April 2011.
“Widespread cases of demand exceeding supply highlight the ongoing presence of solid underlying core inflationary pressures,” Williamson said.
However, euro zone inflation slowed to a 14-month low in February, official data showed on Wednesday, underlining the ECB’s caution in removing stimulus despite growth exceeding expectations.
Prices across the bloc rose 1.2 per cent last month, a long way below the ECB’s 2.0 per cent target ceiling.
Meanwhile, German consumer confidence dipped in February, with more Germans registering scepticism about the country’s economic future than a month earlier, according to marketing analysis company GfK on Wednesday.
February’s score of 45.6 erased nearly all the gains seen in January,when the economic expectations index soared to 54.4. However, the February 2018 rate was significantly better than a year ago, when the index stood at 9.7.
Wednesday’s report showed a moderate decline in income expectations among respondents, to 53.8. But that is still an extremely high level, noted GfK and almost six points higher than the rate of a year ago.
— Reuters
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