LONDON, Feb 20 (Reuters) – Euro zone business activity accelerated faster than forecast this month as manufacturing swung back to growth for the first time since October, though the dominant services sector marginally underperformed expectations, a survey showed.
The HCOB Flash Eurozone Composite PMI, compiled by S&P Global and released on Friday, rose to 51.9 in February from 51.3 in January, marking the 14th consecutive month of expansion and exceeding expectations in a Reuters poll of a more modest rise to 51.5.
PMI readings above 50.0 indicate growth in activity with those below reflecting contraction.
The headline manufacturing PMI jumped to 50.8 from 49.5 while the output index, which feeds into the composite reading, bounced to a six-month high of 52.1 from 50.5.
February’s rebound was driven by a resurgence in demand with the factory new orders index climbing to 50.9 from 49.2.
“It might be premature, but this could be the turning point for the manufacturing sector as the headline PMI increased to growth territory,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“Since June 2022 this happened only once, in August of last year. This time, the overall basis for further growth seems to be a bit better.”
Services showed a modest improvement with their PMI nudging up to 51.8 from 51.6. The Reuters poll had predicted a slightly bigger uptick to 51.9.
Overall pricing pressures nudged up. But firms increased charges at a more modest pace, giving scant reason to revise expectations that the European Central Bank will hold interest rates steady for at least the rest of this year.
(Reporting by Jonathan Cable; Editing by Joe Bavier)
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