The Eurozone's private sector remained in marginal growth territory in February 2025, with the flash Eurozone composite PMI steady at 50.2. While Germany posted its strongest expansion in nine months, France saw its sharpest contraction in nearly 18 months.

Services continued to drive growth (PMI 50.7), but momentum slowed to a three-month low. Manufacturing remained in contraction (PMI 47.3) despite hitting a nine-month high. New orders fell for the ninth consecutive month, signalling weak demand, with services joining manufacturing in decline.

Employment conditions deteriorated, with manufacturing job losses at their worst since July 2012 (excluding COVID-19), offsetting modest service hiring. While backlogs of work shrank, indicating excess capacity, firms cut purchasing activity in response to sluggish demand. Inflationary pressures intensified, with input costs rising fastest since April 2023. Service sector prices surged, but manufacturers were forced to discount, keeping output price inflation at a ten-month high.

Eurozone businesses remain cautious, with confidence slipping to a three-month low. While Germany's resilience offers some optimism, France's decline and persistent demand weakness cast doubts over sustained recovery. The latest update takes the RPI to minus 9 and the RPI-P to minus 11, meaning that economic activities are slightly behind market expectations of the euro area.

The call for PMI composite is 50.3 versus 50.2 in January with manufacturing marginally better at 47.0 from 46.6 and services up to 51.5 from 51.3.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The survey, produced by S&P Global uses a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

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.