At 53.2 in February, the final seasonally adjusted Markit Eurozone Manufacturing PMI® came in above the earlier flash estimate of 53.0. Although indicating a modest slowdown in the rate of expansion from January’s 32-month high, this still confirmed that the manufacturing recovery had completed its eighth successive month.
Growth was broad-based in February, with PMI readings for six out of the seven nations for which data were available signalling expansion (the Greek Manufacturing PMI is released on 4th March). The Netherlands rose back to the top of the PMI league table and, along with Ireland and Spain, was one of three nations to record a faster rate of expansion than in January. Germany and Austria remained among the strongest performers, despite seeing rates of improvement ease slightly over the month. Italy also continued its recovery, despite its PMI dipping to a three-month low. Although France remained at the foot of the table, there was brighter news on this front as well. The France Manufacturing PMI rose to a five-month high of 49.7, up from the flash reading of 48.5, making it the main contributor to the gain between the flash and final eurozone PMI.
Eurozone manufacturing output, new orders and new export business all rose for the eighth successive month in February. Rates of expansion also remained solid in all three cases, despite losing some impetus compared to the prior month.
All seven of the nations for which February data were available reported higher levels of production and new export orders. France was the only one of those nations to see a drop in total new orders, although the pace of contraction was weaker than signalled by the earlier flash estimate.
The outlook for eurozone manufacturing production also remained positive, with backlogs of work rising for the fifth straight month and stocks of finished goods showing a further decline. Improved demand and increased levels of work-in-hand encouraged further jobs growth, with employment rising for the second successive month in February.
The pace of increase in payroll numbers remained only modest, however, and was weaker than in the previous month. Rates of job creation accelerated in Ireland (four-month high), Spain (six-and-a-half-year record) and Austria (11-month high), but eased marginally in Germany and Italy. Employment returned to growth in the Netherlands, but declined in France.
On the price front, inflationary pressures continued to subside in February. Average input costs declined slightly for the first time in six months, reflecting (in part) lower energy prices. Input costs fell in Germany and France, but rose in Italy, Spain, the Netherlands, Austria and Ireland. Meanwhile, average output charges rose only marginally and at the weakest pace since last October. A number of firms indicated that they were still facing strong competition. The big-three nations of Germany, France and Italy all reported higher selling prices, as did Austria.
HSBC CHINA MANUFACTURING PMI CONFIRMS SLOWDOWN
Chinese manufacturers signalled reductions of both output and new business in February, leading to a moderate deterioration of overall operating conditions. As a result, firms cut their staffing levels again in February and at the quickest pace in nearly five years. Meanwhile, input costs and output charges both declined at their fastest rates in eight months.
After adjusting for seasonal factors, such as the recent Chinese New Year festival, the HSBC Purchasing Managers’ Index™ (PMI™) posted at 48.5 in February, up fractionally from the earlier flash reading of 48.3, and down from 49.5 in January. This signalled a moderate deterioration in the health of the Chinese manufacturing sector.
February data signalled the first contractions of both output and new orders at Chinese manufacturers since July 2013. The rates of decline were moderate in both cases, and were linked by panellists to weaker-than expected client demand. New business from abroad also declined over the month, and at a modest pace that was little-changed from January.
Lower output requirements and fewer new orders led to a fourth successive monthly fall in staffing levels at Chinese goods producers in February. Furthermore, the rate of job shedding was the quickest since March 2009. Despite reduced payroll numbers, outstanding business declined at Chinese manufacturing firms in February. Though only slight, it was the first fall in the level of work-in-hand for seven months. According to survey respondents, reduced volumes of new business enabled firms to lower their amount of unfinished work.
Fewer new orders also led companies to reduce their purchasing activity in February. This was the first time that input buying had decreased since July 2013.
Inventories of pre-production goods also fell over the month as companies readjusted stock levels in line with reduced production requirements. Meanwhile, suppliers’ delivery times improved for the third month in a row. However, the rate of improvement eased to a fractional pace.On the price front, average input costs fell for the second month running in February. Moreover, the rate of input price deflation was the strongest since June 2013. According to anecdotal evidence, relatively muted demand for inputs enabled firms to negotiate discounts on production materials. Finally, manufacturers cut their factory gate prices for the third month in a row during February, and at the quickest rate in eight months.
