According to the preliminary results of the purchasing managers‘ survey in the euro zone, the sentiment barometers fell slightly compared with the previous month from a still high level. The slight decline is not surprising. Following last year’s sentiment improvement, a correction was clearly to be expected. It may also be that demand, particularly in the export business, has been dampened somewhat by the now higher exchange rate of the euro against the US dollar. Nevertheless, the upswing remains intact.
The composite index for the euro zone declined slightly in February based on preliminary figures, from 58.8 to 57.5 index points. This can be attributed to slight declines in both industry and the services sector, each of which reported a sizeable but nonetheless lower increase in order intake. This is not only the case in France and Germany but also in the other economies covered by the survey. But these results are not due for publication until the beginning of next month.
In Germany, the trend headed slightly downhill. The two sentiment barometers for industry and services declined slightly on the previous month. The composite index therefore fell from 59.0 in the previous month to 57.4 index points. However, the previous month’s reading had reached the highest level in 81 months. On balance, though, the assessment of the economic situation remains very good, despite slower growth in production, order intake and order volume. According to data of the research institute IHS Markit, the assessment of business prospects has further improved. Within the space of a year, these sub-components have reached a new record level. The services sector is the main reason for this. While optimism clearly predominates here, the industrial companies are looking somewhat less positively to the future than in the two preceding months.
In France too, the private sector is in robust shape according to the survey results but is no longer quite as optimistic. The composite index stood in February at 57.8 points, i.e. 1.8 index points below the previous month’s reading. This is the lowest reading in four months. Even so, this still high level and the clear gap in relation to the neutral mark of 50 index points suggests that economic growth will continue. In France, the sentiment barometer both for industry and the services sector declined somewhat. In both sub-sectors, production and new orders recorded further gains, but at a more moderate pace than in the preceding months.