The euro area's manufacturing sector remained in contraction in February, but the downturn showed signs of easing as the HCOB Eurozone Manufacturing PMI rose to 47.6, its highest level in two years. The reading, up from 46.6 in January, signalled the mildest decline in industrial activity since early 2023, with factory output nearing stabilisation. New orders, including exports, fell at their slowest pace in nearly three years, while companies eased pre-production inventory and purchasing cutbacks. Manufacturing growth expectations were among the most optimistic since Russia's full-scale invasion of Ukraine in 2022. Despite the improved outlook, job losses intensified, with employment declining at the fastest rate in four-and-a-half years. Input cost inflation also hit a six-month high, but firms struggled to pass on higher expenses as output charges fell slightly. Across the eurozone, Germany, France, Italy, and Austria saw softer declines, while factory activity stabilised in the Netherlands. Ireland recorded stronger growth, whereas Spain slipped into contraction for the first time in over a year. Chief Economist at Hamburg Commercial Bank, Dr Cyrus de la Rubia, noted that while it is too early to call a recovery, signs of stabilisation are emerging, adding that political stability in Germany and France and a trade deal with the US on key tariff issues could further support growth in the months ahead. Attribution: Amwal Al Ghad English Subediting: M. S. Salama
