Eurozone, manufacturing picks up speed again: PMI at its highest since 2022

Private-sector activity in the euro area accelerated more than expected in February, driven by the return to growth of German manufacturing. The Composite Purchasing Managers’ Index (PMI) compiled by S&P Global rose to 51.9 from 51.3 in January, beating analysts’ forecasts of 51.5 and remaining above the 50-point threshold that separates expansion from contraction.

Germany, the bloc’s largest economy, made the difference, with industrial output increasing for the first time in more than three and a half years. The rebound has been supported by higher public spending on defence and infrastructure. In France, the index improved but remained just below the 50 mark.

Overall, the European economy is showing solid resilience, albeit without strong momentum. Annual growth is expected at just over 1%, supported mainly by Germany’s fiscal stimulus, while low and stable interest rates have strengthened consumer confidence to its highest level since late 2024. This backdrop is consolidating despite the trade tensions that followed the wave of tariffs introduced by Donald Trump.

The services sector continues to expand at a moderate pace, although compared with the fourth quarter the overall growth dynamic appears less buoyant. Price pressures have eased somewhat, but remain elevated, particularly in services.

Against this backdrop, the European Central Bank does not appear inclined to change its monetary policy stance: with inflation in line with its 2% target, Frankfurt considers structural reforms a higher priority than further rate adjustments. The PMIs, traditionally watched closely by markets as leading indicators, therefore point to a gradual but still fragile recovery that will need to be consolidated in the coming months.

Andrea Pelucchi