LONDON, March 2 (Reuters) - Euro zone manufacturing expanded at its fastest pace in nearly four years last month as new orders bounced and factory output rose although rising cost pressures squeezed
Euro Zone Factory Growth Reaches Highest Level in Nearly Four Years
Euro Zone Manufacturing Expansion and Economic Indicators
LONDON, March 2 (Reuters) - Euro zone manufacturing expanded at its fastest pace in nearly four years last month as new orders bounced and factory output rose although rising cost pressures squeezed margins, a survey showed on Monday.
PMI Data and Survey Results
The HCOB Eurozone Manufacturing Purchasing Managers' Index, compiled by S&P Global, climbed to 50.8 in February from 49.5 in January, marking its highest reading since June 2020 and the first time above the 50 threshold since August.
Understanding PMI Readings
PMI readings higher than 50.0 indicate growth in activity.
Country-Specific Performance
"This seems to be a broad-based recovery of the euro zone manufacturing sector, with six out of the eight surveyed countries now in growth territory," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Drivers of the Upturn
The upturn was driven by the strongest rise in new orders since April 2022, with demand in positive territory for only the second time in nearly four years. Factory output also expanded for the 11th time in 12 months, reaching a six-month high.
Leading and Lagging Economies
Germany led the recovery by returning to growth for the first time in three-and-a-half years. Italy, the Netherlands, Ireland and Greece also posted solid expansions.
France was the only major economy to slow, with manufacturing broadly stalling after January's solid upturn, while Spain stagnated and Austria saw a marginal deterioration.
Export Orders and Inflationary Pressures
Export orders remained weak but contracted at the mildest pace in three months, suggesting demand was stabilising.
Rising Input Costs and Prices
However, inflationary pressures intensified sharply. Input costs rose at the fastest rate in 38 months as companies reported higher energy prices.
Manufacturers raised their selling prices at the steepest pace since March 2023.
Business Confidence and Employment Trends
Despite the challenges, business confidence surged to a four-year high with companies more optimistic about year-ahead growth prospects.
Factory Employment
Factory employment continued to decline across the euro zone, extending a trend since June 2023, though the pace of job losses moderated.
(Reporting by Jonathan Cable; Editing by Toby Chopra)
