Glimmer of Economic Light from the Eurozone

06 March 2008

HENLEY-ON-THAMES, UK: The headline Eurozone Composite Output Index – covering both manufacturing and service sectors –  registered 52.8 in February, recovering from January's 33-month low.

The PMI (Purchasing Managers' Index) Report on Eurozone, produced for The Royal Bank of Scotland by NTC Research, was nevertheless still the second-lowest reading recorded in the past thirty months, indicating that the rate of growth of private sector economic output remained well below the pace seen prior to last autumn's slowdown

Key findings for February 2008:

  • Overall Growth
    This slowed in manufacturing and remained weak in services, though the latter recovered in from the near-stagnation seen in January. 
  • Output
    Looking at the combined output of the manufacturing and service sectors in each of the big-four euro countries, trends varied substantially. France was the only one of the four countries to maintain a rate of output growth similar to the average recorded last year, registering the strongest rate of expansion of the big-four by a wide margin. Germany also saw an expansion of output, its rate of growth accelerating to reach a four-month high. Output fell in Italy at the fastest rate for 33 months but Spain saw the sharpest contraction of the big-four, even though the rate of decline slowed slightly from January. 
  • New Business
    Growth of new business rose to a three-month high from January's near-standstill. New business fell for the third month in both Italy and Spain. German service companies meanwhile reported an increase in new business for the first time in three months, while France continued to record the strongest rate of increase of the big-four countries by a wide margin. 
  • Input Price Inflation

  • This eased slightly from January's 17-month high. Higher food, fuel and energy prices were again widely reported, keeping the overall rate of increase above the average recorded last year. Of the big-four countries, the highest pace of input price inflation was recorded in France (where the rate of increase hit a 19-month high) followed by Italy, while Germany reported the weakest rise. However, the most notable development was in Spain, where the rate spiralled to the highest for over seven years. 
  • Employment growth

  • This gathered pace very slightly to reach a three-month high in February. The pace of job creation has held up well relative to output growth in recent months, running only modestly weaker than the average recorded last year. Among the big-four, further robust employment growth was recorded in Germany and France. However, employment was largely unchanged in Italy, while Spain saw a drop in staffing levels for the first time in four-and-a-half years.
The Eurozone comprises the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the twelve nation euro currency area.

The data are currently based on the results of surveys carried out in Germany, France, Spain, Italy, Austria, Ireland, Greece and the Netherlands (plus the UK, Poland and the Czech Republic for the EU data), covering over 6,000 manufacturing and services companies.

These countries together account for an estimated 92% of total Eurozone gross domestic product.
Questions are asked about real events and are not opinion based.

Data sourced from NTC Research (UK); additional content by WARC staff