Investing.com - Manufacturing activity in the euro zone improved less-than-expected in February, remaining in contraction territory for the seventh consecutive month, preliminary data showed on Wednesday.
In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index rose by 0.2 points to a seasonally adjusted 49.0 in February from a reading of 48.8 in January.
Analysts had expected the index to ease up by 0.6 points to 49.4 in February.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The latest reading was nevertheless the second-highest of the past six months, and suggests that the euro zone economy has stabilized over the first two months of the year having contracted in the final quarter of 2011.
The report showed that service sector activity in the euro zone unexpectedly contracted in February.
The preliminary services purchasing managers’ index declined by 1.0 point to a seasonally adjusted 49.4 from 50.4 in January. Analysts had expected the index to rise by 0.3 points to 50.7.
Output rose in Germany and, to a lesser extent, in France. In both cases, however, the rate of expansion was slightly weaker than in January.
Output fell across the rest of the region, and at a slightly steeper rate than in January.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “A retreat back below the 50.0 no-change level for the euro zone PMI is a disappointment, and highlights the ongoing risk that the region may be sliding back into recession.”
He added that, “Although business conditions are showing signs of stabilizing so far this year, which represents a marked improvement on the widespread deepening gloom seen late last year, the euro zone is by no means out of the woods.”
“Sharp divergences in performance also continued to be evident across the region, with modest growth in Germany contrasting with a steep decline in the periphery. Given the lack of domestic demand in austerity-hit peripheral countries, this divergence looks set to continue for some time,” Williamson said.
Following the release of the data, the euro held on to modest losses against the U.S. dollar, with EUR/USD easing down 0.05% to trade at 1.3227.
Meanwhile, European stock markets remained lower. The EURO STOXX 50 declined 0.6%, France’s CAC 40 shed 0.3%, London’s FTSE 100 fell 0.25%, while Germany's DAX dropped 0.65%.
In a report, market research group Markit said that its preliminary manufacturing purchasing managers’ index rose by 0.2 points to a seasonally adjusted 49.0 in February from a reading of 48.8 in January.
Analysts had expected the index to ease up by 0.6 points to 49.4 in February.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The latest reading was nevertheless the second-highest of the past six months, and suggests that the euro zone economy has stabilized over the first two months of the year having contracted in the final quarter of 2011.
The report showed that service sector activity in the euro zone unexpectedly contracted in February.
The preliminary services purchasing managers’ index declined by 1.0 point to a seasonally adjusted 49.4 from 50.4 in January. Analysts had expected the index to rise by 0.3 points to 50.7.
Output rose in Germany and, to a lesser extent, in France. In both cases, however, the rate of expansion was slightly weaker than in January.
Output fell across the rest of the region, and at a slightly steeper rate than in January.
Commenting on the report, Chris Williamson, Chief Economist at Markit said, “A retreat back below the 50.0 no-change level for the euro zone PMI is a disappointment, and highlights the ongoing risk that the region may be sliding back into recession.”
He added that, “Although business conditions are showing signs of stabilizing so far this year, which represents a marked improvement on the widespread deepening gloom seen late last year, the euro zone is by no means out of the woods.”
“Sharp divergences in performance also continued to be evident across the region, with modest growth in Germany contrasting with a steep decline in the periphery. Given the lack of domestic demand in austerity-hit peripheral countries, this divergence looks set to continue for some time,” Williamson said.
Following the release of the data, the euro held on to modest losses against the U.S. dollar, with EUR/USD easing down 0.05% to trade at 1.3227.
Meanwhile, European stock markets remained lower. The EURO STOXX 50 declined 0.6%, France’s CAC 40 shed 0.3%, London’s FTSE 100 fell 0.25%, while Germany's DAX dropped 0.65%.