March 2, 2020 / 9:30 AM / a month ago

Euro zone factory downturn eased in February despite virus fears - PMI

FILE PHOTO: A steel worker of Germany's industrial conglomerate ThyssenKrupp AG stands a mid of emitting sparks of raw iron from a blast furnace at Germany's largest steel factory in Duisburg, Germany. REUTERS/Wolfgang Rattay/File Photo

LONDON (Reuters) - The manufacturing downturn in the euro zone eased last month despite the coronavirus outbreak and its impact on supply chains, in an encouraging sign for the European Central Bank as it tries to stoke growth, a survey showed on Monday.

IHS Markit’s Manufacturing Purchasing Managers’ Index rose to 49.2 in February from January’s 47.9, pipping a preliminary estimate of 49.1 and chalking up its highest reading in a year.

While that held below the 50 mark separating growth from contraction for a 13th month, it was ahead of expectations in a Reuters poll for no change from the flash reading.

An index measuring output that feeds into a composite PMI due on Wednesday and is seen as a barometer of economic health climbed to 48.7 from 48.0, its highest since May.

“Despite widespread reports from companies that the coronavirus outbreak disrupted supply chains and hit foreign sales, February saw encouraging signs that the euro zone’s manufacturing downturn is easing,” said Chris Williamson, chief business economist at IHS Markit.

However, hopes that the coronavirus epidemic that began in China would be over quickly and economic activity would return to normal were dashed last week as the number of international cases increased steadily, suggesting its impact is far from over.

But factory managers remained relatively upbeat and optimism about the coming 12 months remained high. The future output index was 58.3, albeit down from January’s 17-month high of 59.8.

Reporting by Jonathan Cable; Editing by Hugh Lawson

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