Eurozone PMI Manufacturing rose from 49.5 to 50.8 in February, moving back into expansion territory and reaching its highest level in 44 months. PMI Services edged up from 51.6 to 51.8. PMI Composite climbed from 51.3 to 51.9.
According to Hamburg Commercial Bank’s Cyrus de la Rubia, this could mark a potential “turning point” for the manufacturing sector. Manufacturing has been a persistent drag since mid-2022, and although the index briefly crossed 50 last August, this time the foundation appears stronger. New business improved across both manufacturing and services, pointing to continued expansion in coming months.
Germany is playing a central role in the improved outlook. Higher public spending on infrastructure and defence, along with firmer external demand, are supporting industrial activity. However, de la Rubia cautioned that overall growth momentum has softened slightly compared with the fourth quarter, suggesting expansion remains moderate rather than accelerating.
Price pressures in services — closely watched by ECB — “relaxed a bit”. Nevertheless, service inflation remains elevated enough to discourage a shift in policy stance. With activity stable and inflation not yet fully subdued, ECB appears inclined to keep rates steady for now.
