Eurozone: Industrial sentiment signals growth

Industrial sentiment turns into growth territory

Industrial sentiment in the eurozone improved again in February. As S&P announced in London after a second estimate, the purchasing managers’ index (PMI) rose by 1.3 points to 50.8. An initial estimate was thus confirmed as expected by analysts, reports dpa-AFX.

With the jump above the 50-point mark, the indicator is signaling an expansion of economic activity for the first time since August. In the previous month, the value had still stood at 49.5 points. The 50-point threshold is considered the key dividing line between contraction and growth in manufacturing.

Germany and France with opposing momentum

In the two largest economies of the eurozone, industrial sentiment developed differently. While the corresponding indicator in France fell significantly and, at 50.1 points, is now only just above the expansion threshold, Germany recorded a noticeable increase.

The German PMI rose to 50.9 points and is therefore clearly in growth territory. In January, the value had still been 49.1 points. This means that German industry is currently providing the strongest impulses within the eurozone.

Broad-based recovery in manufacturing

Further core countries are also showing signs of stabilization. In Italy, industrial sentiment rose unexpectedly sharply, reaching 50.6 points after previously standing at 48.1. In Spain, the index climbed as forecast to exactly 50.0 points, thus marking the expansion threshold.

"It appears to be a broad-based recovery in the eurozone’s manufacturing sector," wrote Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. Six of the eight countries surveyed are in growth territory, and German industry is also showing the highest growth rate.

Moderate recovery despite structural burdens

At the same time, the expert urges caution in interpreting the momentum: "Of course, we are not talking about a boom here, but about a moderate recovery starting from a low level of activity, while structural challenges such as high energy prices, intense competition from China, and U.S. tariffs continue to persist."

The current data thus paint a picture of a cautious but broad-based revival of industrial production in the eurozone – driven by several large economies, yet still shaped by structural conditions.

With material from dpa