Eurozone Business Growth Slowed in February, PMI Study Suggests

Business growth in the euro-zone eased this month but the bloc’s economy continued to expand at a “robust pace”, a closely watched survey suggests.

Production line in the Volkswagen plant in Wolfsburg

Business output in Germany continues to grow

The latest Markit eurozone composite purchasing managers’ index (PMI) dipped to 52.7 from 52.9 in January. A figure above 50 indicates expansion.

Within the bloc, Germany and France continued to see contrasting fortunes.

German companies saw strong growth, but activity among French firms declined for the fourth month in a row.

Earlier on Thursday, a similar survey in China indicated that the country’s manufacturing sector had contracted for the second month in a row.

The preliminary HSBC PMI survey for the sector fell to 48.3 from January’s reading of 49.5. February’s measure was the lowest for seven months, adding to fears about the strength of China’s economy.

The Chinese data hit Asian stock markets, and also sent European markets lower when trading began on Thursday.

Growth hopes

Markit’s survey covers about 5,000 companies in the eurozone. The latest, preliminary figure is referred to as the “flash” estimate, as it is based on the responses of about 85-90% of the firms.

The latest reading indicates that business activity in the eurozone has now grown for eight months in a row.

New orders grew in February at their fastest rate since June 2011, the survey found, but employment remained unchanged for the third consecutive month.

In Germany, strong demand meant that companies saw activity and new orders grow at the fastest pace since June 2011, while job creation was at the fastest rate since January 2012.

But in France, the rate of decline in business activity picked up, with firms continuing to cut jobs.

Last week, official figures showed that the eurozone’s economy grew by 0.3% in the final three months of 2013, up from 0.1% growth in the previous quarter.

“Looking at the latest two months as a whole, the PMI suggests the region is on course to see GDP expand by up to 0.5% in the first quarter, which would be the strongest growth for three years,” said Chris Williamson, Markit’s chief economist.

“Growth continued to be led by Germany, which contrasts with a worrying renewed downturn in France.

“The ‘periphery’ is meanwhile enjoying its best period of growth since early 2011, which should help drive a more broad-based and sustainable expansion as we move through 2014.”