Eurozone February final manufacturing PMI 48.5 vs 48.5 prelim | Forexlive

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.”