|Composite - Level||53.5||53.3||52.6|
|Services - Level||53.9||53.7||52.7|
According the final composite output index, the Eurozone economy grew a little less robustly than previously estimated in February. At 53.3, the revised headline index was 0.2 points below its flash mark but still up 0.7 points from its final January level. The downward revision reflected a marginally less buoyant services sector for which the flash PMI was revised 0.2 points lower to 53.7, still a full point higher than at the start of the year.
The improvement in services reflected the fastest rise in new business in eight months and further increases in both employment and backlogs, the latter advancing for a second consecutive month and by the largest amount since May 2011. Job creation hit a 45-month high and business optimism improved to its strongest reading since mid-2011.
Inflation developments were mixed. Input costs continued to rise and at a somewhat accelerated, if modest, rate but, crucially, service provider charges declined for a remarkable thirty-ninth straight month.
In terms of overall economic output, Ireland (60.7) was easily at the top of the growth ladder ahead of Spain (56.0) and Germany (53.8). France (52.2) posted a reassuringly firm 42-month high but Italy (51.0) slipped to a 2-month low.
The final February PMI results should be consistent with Eurozone real GDP expanding at close to a 0.3 percent quarterly rate in the current period. Although this would still be disappointingly sluggish, in the bigger scheme of things the improving tone of the more forward looking indicators bodes well and the return of France to positive growth territory is a major plus. The ECB would be quietly happy with the report but for the ongoing decline in selling prices.
The Eurozone Composite PMI is produced by Markit and is based on original survey data collected from a representative panel of around 5,000 manufacturing and services firms. National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland.
The Eurozone Services PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of around 2,000 private service sector firms. National data are included for Germany, France, Italy, Spain and the Republic of Ireland. These countries together account for an estimated 80% of Eurozone private sector services output.
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.