Markit's Eurozone Manufacturing Purchasing Managers Index (PMI) posted 49.3 points in February, down from January’s 50.5 points and remaining almost unchanged compared to the earlier flash estimate at 49.2 points.
By market group, weakness was again most apparent in the intermediate and investment goods sectors. Both recorded deteriorations in operating conditions compared to the previous month. In contrast, consumer goods continued to expand, albeit at a modest pace that was the weakest seen since July 2016.
Finally, the deepening downturn in new work, plus worries over domestic political and international trade developments, continued to weigh on expectations during the latest survey period. Overall business confidence dipped on January’s four-month high and was amongst the weakest seen in the past six years.
Commenting on the final Manufacturing PMI data, Chris Williamson, chief business economist at IHS Markit said, “Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring. “Most worrying is the downward trend in new orders. Orders are falling at a faster rate than output to a degree not seen for seven years, meaning production is likely to be pared back further in coming months unless demand revives. The new orders to inventory ratio has also fallen to its lowest since 2012, with many companies reporting excess warehouse stocks.” Furthermore, “In addition to widespread trade war worries, often linked to US tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion,” Williamson added.