The final reading matches that of the initial release, with it being a mixed bag across the euro area in terms of manufacturing PMI for the month of February:
Overall, softer demand conditions are still weighing on factory output with new orders falling for a tenth straight month. That said, price pressures are easing and that is at least one positive development that could help with the optimism in the months ahead. S&P Global notes that:
“A marginal expansion of output reported by Eurozone manufacturers in February is welcome news in representing the first increase since last May and a further improvement in the underlying trend from the low seen back in October.
“The brighter production picture first and foremost reflects a broad-based improvement in supply chains, with deliveries of inputs into factories quickening on average to a degree not seen since 2009. Fewer supply shortages and delays have facilitated higher output, allowing companies to deal with backlogs of work accumulated during the pandemic.
“Unfortunately, inflows of new orders continued to fall at a marked rate, reflecting persistent weak demand as customer spending remained subdued. Inventory reduction policies also led to falling demand for manufactured inputs.
“Demand will therefore need to rise further in the coming months if production growth is to be sustained, breaking the reliance on backlogs of work.
“In the meantime, the combination of improved supply and sustained weak demand – as well as lower energy prices – is helping bring inflation pressures down sharply, with raw material input costs barely rising in February to signal the slowest rate of increase for around two-and-a-half years. Although factory selling prices continued to rise sharply, albeit with the rate of increase easing to a twoyear low, this in part reflects the usual lagged effect of changes in costs feeding through to output prices.”
