Manufacturing activity in the eurozone accelerated in February, with the sector showing its most robust expansion since mid-2020 amid improved order volumes and higher production. The pace of growth offers a positive signal for investors, though rising costs weighed on profit margins.
The latest HCOB Eurozone Manufacturing Purchasing Managers’ Index, released by S&P Global, reached 50.8 in February, up from 49.5 the previous month. This marks the first time since August that the index topped the 50.0 threshold, denoting expansion in the sector. According to Hamburg Commercial Bank’s chief economist, Cyrus de la Rubia, most countries surveyed recorded growth, indicating a widespread recovery.
Growth in new orders contributed significantly, rising at the fastest rate since April 2022. This increase drove factory output to its highest level in six months, with production expanding for the eleventh time in the past year.
Among the region’s major economies, Germany picked up notably, reporting its first manufacturing growth in over three years. Italy, the Netherlands, Ireland, and Greece also showed solid improvements. However, France’s growth momentum faded, with production stagnating, while Spain’s output was flat, and Austria experienced a slight downturn.
Although total export orders continued to fall, the rate of decline eased, signalling signs of stabilization in external demand.
On the cost side, input prices saw their steepest increase in more than three years, primarily attributed to rising energy expenses. This trend led manufacturers to push through the strongest price increases for their products since March 2023.
Businesses reported a marked rise in optimism about the coming year, lifting confidence levels to their highest point in four years. On the other hand, employment levels in factories continued their downward trend, though the pace of job reductions slowed.
