Today,
February
22,
“flash”
estimates
for
purchasing
managers’
indexes™
(PMI®) in
the
UK
and
Eurozone
have
been
released.
With
the UK
now
officially
in
recession,
joining
Germany,
these
data
sets
are
closely
watched
for
signs
of
recovery
in
key
economic
sectors
like
manufacturing
and
services.
They
are
initial
estimates
for
the
current
month
that
are
subject
to
revision.
Starting
with
the
Eurozone,
business
activity
fell
at
the
slowest
rate
for
eight
months
in
February,
according
to
provisional
PMI®
survey
data
provided
by
S&P
Global
today.
Stabilisation
of
output
in
the
service
sector
offset
a
further
steep
downturn
in
manufacturing.
The
seasonally
adjusted
HCOB
Flash
Eurozone
Composite
PMI
Output
Index
rose
from
47.9
in
January
to
48.9
in
February
(slightly
higher
than
FacSet
consensus).
Here
50
is
the
dividing
line
between
expansion
and
contraction.
In
its
note,
S&P
says:
“Although
signalling
a
ninth
consecutive
month
of
falling
output,
February’s
decline
was
the
smallest
since
last
June.
While
the
latest
reading
suggests
that
the
eurozone’s
deepest
contraction
since
2013
(if
early
pandemic
months
are
excluded)
has
persisted
into
2024,
the
rate
of
decline
is
showing
signs
of
moderating
in
the
first
quarter.”
The
figures
continue
to
vary
markedly
by
sector
across
the
eurozone.
Manufacturing
output
fell
to
46.2
for
an
eleventh
consecutive
month,
an
acceleration
of
decline
after
a
moderation
in
January
(46.6).
In
contrast,
service
sector
business
activity
stabilised
at
50
(slightly
higher
than
in
January),
after
six
months
of
continual
deterioration.
Germany
is
Lagging
the
Eurozone
By
country,
a
deepening
contraction
in
Germany
and
sustained
output
fall
in
France
were
countered
by
faster
growth
in
the
rest
of
the
region.
Germany’s
output
dropped
for
an
eighth
successive
month,
at
the
fastest
rate
since
last
October.
France’s
output
also
declined,
but
at
the
smallest
recorded
rate
since
the
country’s
downturn
began
in
June
of
last
year.
Meanwhile,
the
rest
of
the
eurozone
collectively
reported
growth
of
output
for
a
second
month
running,
in
contrast
to
the
prior
five
months
of
decline.
This
is
the
largest
monthly
improvement
since
last
May.
Service
sector
growth
sped
up,
and
manufacturing
has
almost
stabilised.
Confidence
has
also
improved
to
hit
a
ten-month
high.
This
is
encouraging
firms
to
raise
staffing
levels
at
a
pace
not
seen
since
last
July,
signalling
that
the
eurozone
downturn
is
moderating.
Will
the
ECB
Cut
Interest
Rates?
According
to
Michael
Field,
European
market
strategist
at
Morningstar,
flash
PMIs
today
confirmed
two
things:
•
Expectations
in
Europe
are
low.
•
The
picture
is
still
mixed.
“Manufacturing
PMIs
in
Europe
declined
in
February.
With
energy
prices
elevated
and
a
relatively
tight
labour
market,
it
is
hard
to
see
this
trend
improving
materially
anytime
soon,”
Field
says.
“Services
PMIs
were
more
promising,
rising
to
50
for
the
first
time
since
summer
2023,
ahead
of
economists
expectations.”
“All
in
all
though,
the
European
economy
remains
weak,
whether
this
translates
into
swift
interest
rate
cuts
by
the
ECB
remains
to
be
seen.
But
certainly,
the
ECB
is
under
growing
pressure
to
take
action
on
this
front,”
ended
Field.
UK
PMI
Soothes
Recession
Worries
Morningstar’s
Field
comments
that
the
UK’s
numbers
follow
the
trends
in
the
eurozone,
too.
The
UK’s
private
sector
expanded
for
the
fourth
consecutive
month
and
at
the
fastest
pace
since
May
last
year,
preliminary
data
suggested
on
Thursday.
The
index
rose
to
a
nine-month
high
of
53.3
points
in
February
from
52.9
points
in
January.
Rising
further
about
the
50-point
no-change
mark,
it
shows
the
pace
of
expansion
sped
up
slightly.
The
reading
was
higher
than
FXStreet-cited
market
consensus
of
52.9.
Field
says:
“Essentially
services
are
showing
a
significant
improvement,
rising
to
54.3
in
February,
ahead
of
expectations.
Manufacturing
remains
firmly
below
the
magic
50
number,
at
a
lowly
47.1,
with
the
outlook
here
unlikely
to
reverse
any
time
soon.
The
flash
UK
services
PMI
was
unchanged
from
January,
standing
at
54.3
points.
FXStreet
were
expecting
a
lower
reading
of
54.1.
The
S&P
note
explains
that
survey
respondents
often
cited
a
turnaround
in
business
and
consumer
spending,
despite
ongoing
cost-of-living
pressures,
whilst
some
also
commented
on
a
boost
from
less
restrictive
financial
conditions.
Chris
Williamson,
chief
business
economist
at
S&P
Global
Market
Intelligence,
comments:
“The
survey
data
point
to
the
economy
growing
at
a
quarterly
rate
of
0.2-3%
in
the
first
quarter
of
2024,
allaying
fears
that
last
year’s
downturn
will
have
spilled
over
into
2024
and
suggesting
that
the
UK’s
‘recession’
is
already
over.”
Will
the
Bank
of
England
Cut
Rates?
Field
notes
that
whether
the
flash
PMI
figures
mean
UK
savers
can
expect
a
rate
cut
in
the
coming
months
remain
to
be
seen,
but
that
the
Bank
of
England
has
several
options.
“With
interest
rates
in
the
UK
the
highest
of
the
big
developed
countries,
at
5.25%,
the
Bank
of
England
has
significant
room
for
maneuver
with
regard
to
cuts.
For
bankers
trying
to
walk
the
tightrope
of
a
resurgence
of
inflation
and
a
struggling
economy,
their
task
is
not
getting
any
easier,”
he
says.
By
Sara
Silano
and
additional
content
from
Alliance
News
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