The composite Purchasing Managers’ Index, or PMI, for the euro zone climbed to a high not seen in nearly three years while readings from Germany and France indicated the fragile and regional nature of the recovery in Europe.
According to data released by Markit Wednesday, the composite output index in the euro zone beat expectations to rise to 53.3 in February, up from 52.9 in January and an earlier flash reading of 52.7. A Wall Street Journal consensus had estimated the figure to come in at 52.7. PMI for the services sector was recorded at 52.6, up from a flash estimate of 51.7 and January's 51.6 reading.
“The survey suggests the region is on course to grow by 0.4-0.5% in the first quarter, which would be its best performance for three years,” Chris Williamson, Markit’s chief economist, said in a statement.
In Germany, the composite index, which measures the combined output of the manufacturing and service sectors, registered a reading of 56.4, up from 55.5 in January. The reading showed Germany’s private sector grew at its fastest pace in more than two-and-a-half years during February. Germany's Services Business Activity Index rose to 55.9 in February, up from 53.1 in January.
“While manufacturing remained the main engine of economic growth in February, the service sector moved up a gear and saw the strongest growth in output since mid-2011,” said Oliver Kolodseike, an economist at Markit, adding: “Survey data for 2014 so far suggest that the German economy is on track to build on the foundation of last quarter’s growth of 0.4%.”
In contrast, France’s private sector suffered a faster decline in February than before as indicated by the composite PMI index of 47.9, from January’s 48.9 reading. France’s service sector PMI fell to an eight-month low of 47.2, down from 48.9 in January.
“Weak client spending was again reported to have weighed on service providers’ performance. However, companies are hopeful of turning the corner in the foreseeable future, with confidence in the 12-month outlook improving to the highest level for almost two years,” Jack Kennedy, a senior economist at Markit, said in a statement.
Markit’s Williamson who highlighted the performance of Spain, which he noted recorded its best quarter of growth in seven years, and Italy, which saw its growth rate hit a three-year high, warned about “regional divergences” as being a cause for concern for the region’s economic recovery.