S&P Global’s flash Composite Purchasing Managers’ Index (PMI) for the 20 countries that use the euro showed that euro zone business activity has strengthened over the past month. By expanding at a faster pace than predicted, evidence is increasingly suggesting that the European Union could escape a recession.
The index, which measures the overall economic health of the European Union, hit a nine-month high of 52.3 in February, having ended January at 50.3. This performance exceeded the rise to 50.6 that was predicted by forecasts included in a Reuters poll on the subject.
“The healthy PMI readings for February pose upside risks to our growth forecast, raising odds that the euro zone could avoid contracting in Q1,” Rory Fennessy of Oxford Economics observed before cautioning, “Nevertheless, we stress that growth will still underwhelm this year, weighed down by still-high inflation, tightening financial conditions and soft global growth.”
While high costs continue to be a concern, input costs rose marginally while factories’ selling prices were raised at their slowest pace in almost two years.