The eurozone is having a dreadful year so far and figures released yesterday will do nothing to calm the nerves of those concerned about the economy. The PMI surveys from Markit showed that the eurozone’s manufacturing sector unexpectedly contracted in February, marking the first time in five years that it has done so. There was some small comfort found in the fact that the services sector grew at a faster rate than expected, but then that sector always appears to save the day.
It was a similar story in Germany, where manufacturing PMI dropped to just 47.6 this month from 49.7 the previous month. It has been expected to hold steady and two consecutive months of contraction is alarming. In addition, the contraction is the steepest it has been since December 2012, with output falling for the first time since April 2013 and at the quickest rate for more than six years. Again, as with the eurozone, the services sector grew faster than expected, coming in at 55.1 from 53 the previous month and above the anticipated 52.9.
Inflation in Germany dropped to 1.4% from 1.7% the previous month, which was in line with expectations and is certainly good news from the German public. It is the lowest rate since April 2018 and is mainly down to a slowdown in energy.
It is another big day for the eurozone, as we will see the GDP growth rate figures for the fourth quarter of 2018 from Germany. Given the recent raft of disappointing data, it would hardly be surprising to see a poor reading, but several economists expect a pick-up in the first half of this year; with that in mind, not that much will be read into today’s figures – especially given that it is merely the final reading in a series that have already been posted.