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01 Mar 2021 | 09:54

Eurozone manufacturing activity grows in February

(Sharecast News) - Manufacturing activity in the eurozone grew in February at its fastest pace in three years, according to a survey released on Monday. The final IHS Markit manufacturing purchasing managers' index rose to 57.9 from a flash estimate of 57.7 and from January's reading of 54.8. Output and new orders were up sharply.

A reading below 50.0 indicates contraction, while a reading above signals expansion.

Germany, the Netherlands and Austria saw the strongest growth, while Greece saw the weakest.

Chris Williamson, chief business economist at IHS Markit, said: "Manufacturing is appearing as an increasingly bright spot in the eurozone's economy so far this year. The PMI has reached a three-year high to run at a level that has rarely been exceeded in more than two-decades of survey history - notably during the dot-com bubble, the initial rebound from the global financial crisis and in 2017-18.

"Producers are benefitting from resurgent demand for goods in both domestic and export markets, linked to post-Covid recovery hopes driving renewed stock building and investment in business equipment and machinery, as well as improved consumption."

Williamson said the solid manufacturing expansion is helping to offset ongoing virus-related weakness in many consumer-facing sectors, alleviating the impact of recent lockdown measures in many countries and helping to limit the overall pace of economic contraction.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The upturn in new orders was supported mainly by soaring export orders - due in particular to strength in the Netherlands and Germany - driving a continuing increase in production. These trends led to a further gain in work backlogs, which, in turn is now supporting employment gains, with the notable exception of Spain. Finally, a sharply tightening supply-side remains a key story.

"Delivery times deteriorated at a near record pace, extended the trend in recent months. This, in turn, lifted input price inflation to a decade-high. This story is the talk of the town at the moment, reflecting discussions about anything from freight shortage driving up transportation costs to the idea of a commodity 'super cycle'."

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