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Eurozone Recovery Accelerates in February: PMI Data

Feb. 21, 2023
"Business activity across the eurozone grew much faster than expected in February," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Economic growth in the eurozone accelerated in February and hit a nine-month high, according to the closely watched S&P PMI output index.

Data from the survey published on Tuesday showed the indicator at 52.3, up from 50.8 in January. A reading over 50 represents economic growth.

Output in the single currency bloc turned around in January after a slump tied to supply chain disruptions, the COVID pandemic and the war in Ukraine.

With inflation still high but falling and China reopening its economy after strict COVID lockdowns, European growth has returned, raising hopes the eurozone will escape falling into recession.

"Business activity across the eurozone grew much faster than expected in February," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

The higher figure for the purchasing managers' index (PMI) would be consistent with the eurozone economy growing at just under 0.3% in the first quarter of this year, he said.

But the combination of faster growth and still high, though falling, inflation will encourage the European Central Bank to further raise interest rates, he warned.

The ECB has raised interest rates five times since July 2022 and has signaled that it plans to keep doing so in March and probably beyond.

On Friday, the governor of the French central bank, Francois Villeroy de Galhau, described the effort as "a long-distance race" to bring inflation down to the ECB's target of 2%.

"Growth has been buoyed by rising confidence as recession fears fade and inflation shows signs of peaking, though manufacturing has also benefitted from a major improvement in supplier performance," Williamson said.

"The pandemic-related delivery delays that dogged factories over the past two years have given way to faster delivery times, in turn meaning pricing power is shifting from suppliers to factory purchasing managers, bringing industrial price inflation down."

Copyright 2023, Agence France-Presse

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