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EMU: PMI Composite Flash
| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.4 | 51.3 to 52.0 | 51.9 | 51.5 |
| Manufacturing Index | 50.0 | 49.5 to 50.5 | 50.8 | 49.4 |
| Services Index | 52.0 | 51.6 to 52.3 | 51.8 | 51.9 |
Highlights
The February PMI release suggests the Eurozone economy is entering a phase of cautious acceleration rather than robust expansion. The composite PMI rose to 51.9, a three-month high, signalling continued but modest growth, with manufacturing providing the key impulse. The sector's PMI climbed to 50.8, a 44-month high and its first expansion reading in six months, indicating that industrial activity is shifting from contraction toward stabilisation.
However, demand fundamentals remain fragile. Overall, new orders barely grew, export business declined again, and employment fell slightly for a second month, implying firms doubt the durability of the upturn. The persistence of shrinking backlogs also suggests spare capacity remains in the system.
Cost dynamics complicate the outlook. Input prices rose at the fastest pace in nearly three years, led by manufacturing, yet firms raised selling prices more slowly, pointing to margin compression risks. Confidence remains relatively elevated, especially in manufacturing, but has softened marginally.
Taken together, the update suggests an economy moving off its lows with manufacturing acting as the cyclical stabiliser. The expansion is real but delicate, supported by production gains rather than demand strength, leaving growth vulnerable to external shocks and cost pressures. These updates take the RPI to minus 38 and the RPI-P to minus 28, meaning that economic activities continue to underperform compared to market expectations in the euro area.
Market Consensus Before Announcement
The consensus sees the PMI composite flash at 51.4 in February versus 51.3 in the January final. Manufacturing PMI is seen at 50.0 in February flash versus 49.5 in January final. The services PMI is seen at 52.0 in February flash versus 51.6 in January final.
Definition
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.
Description
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.