Business activity has gained momentum in Eurozone in February, as it rose significantly more than expected. The picture emerges from data released yesterday on business activity in the critical manufacturing and services sectors. Thus, the eurozone is likely to be able to avoid this. recession which seemed inevitable a few months ago.

OUR Responsible Purchasing Index (PMI) from S&P Global, reflecting the overall health of the economy, rose to 52.3 in February from 50.3 in January. In the end, it exceeded economists’ forecasts of a rise to 50.6 points. As S&P Global Chief Economist Chris Williamson said during the presentation of the data, “Business activity in the euro area rose more than expected in February, and growth reached a nine-month high thanks to a recovery in the services sector.” He even added that “February PMI was broadly in line with quarterly GDP growth of just under 0.3%.” After all, demand has risen for the first time since mid-2022, and companies have again increased the number of workers, fueling expectations of further growth in the coming months. The index of new enterprises rose to 50.6 points from 48.9 points. As the risk of a recession declines, and with it concerns, optimism for the coming year picked up in February. The business confidence index rose to a nine-month high of 61.5 from 61.2 in January. In February, however, factory activity dropped somewhat. The manufacturing PMI fell to 48.5 from 48.8, contrary to economists’ expectations of growth to 49.3 and below all forecasts.

Equally important, however, is the improvement in relevant data for the two largest economies in the eurozone, Germany and France. In Germany, the PMI rose to 51.1, beating forecasts for a rise of 50.3, and the recovery in Europe’s largest economy appears to be broad-based. The only exception in the German economy is “new order production, which continues to decline, but manufacturers remain moderately optimistic until the end of the year.”

He seems to have avoided a recession that seemed inevitable just a few months ago.

In France, after all, PMI climbed to its highest level in seven months, to 51.6, contrary to economists’ forecasts of a fourth straight month of contraction. As S&P economist Joe Hayes points out, “it’s hard to decide if this is a turning point and if the French economy is on the road to recovery.”

He stressed that “the weakening of the manufacturing sector accelerated somewhat in February, and the conditions driving demand in this sector remain fragile.” It should be noted that the corresponding PMIs for other countries such as Australia and Japan present a similar picture of limited improvement, while those for the UK and the US show some improvement but still suggest a contraction is imminent.