Feb 22, 2016
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Euro zone composite PMI slumps to 13-month low in February

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Investing.com –

Investing.com – Economic activity in the euro zone fell to the
lowest level in more than a year in February and deflationary
pressures intensified, adding to concerns over the health of the
region's economy, preliminary data showed on Monday.

In a report, market research group Markit said that its Flash
Euro Zone Composite Output Index, which measures the combined
output of both the manufacturing and service sectors dropped from
53.6 in January to 53.0 in February, a 13-month low and below
forecasts for 53.3.

The preliminary euro zone manufacturing purchasing managers'
index fell to a seasonally adjusted 53.0 this month, the lowest in
12 months and down from a final reading of 53.6 in January.
Analysts had expected the index to dip to 53.3 in February.

Meanwhile, the flash services purchasing managers' index
declined to a 13-month low of 51.0 this month from 53.2 in January,
missing expectations for a reading of 52.0.

On the index, a reading above 50.0 indicates industry expansion,
below indicates contraction.

Manufacturing output showed the smallest increase since December
2014, moving closer to stagnation amid a further faltering in
growth of new orders and exports. Services fared better, though
nevertheless saw growth weaken to the slowest since January of last
year.

Moreover, a sharp deterioration in optimism about future
activity growth in the services sector points to further weakness
in coming months.

Deflationary pressures meanwhile intensified. Average prices
charged by companies for their goods and services fell at the
steepest rate for a year as firms competed to boost sales.

Commenting on the report, Chris Williamson, Chief Economist at
Markit said, "Disappointing PMI survey data for February greatly
increase the odds of more aggressive stimulus from the ECB in
March."

"Not only did the survey indicate the weakest pace of economic
growth for just over a year, but deflationary forces intensified.
Economic growth is likely to slow below 0.3% in the first quarter
unless we see a sudden uplift in March, which on the basis of the
forward-looking components of the PMI seems unlikely," he
added.

EUR/USD was trading at 1.1090 from around 1.1087 ahead of the
release of the data, while EUR/GBP was at 0.7832 from 0.7820
earlier.

Meanwhile, European stock markets were higher after the open.
The EURO STOXX 50 rose 1.8%, Germany's DAX added 1.6%, France's CAC
40 tacked on 1.45%, while London's FTSE 100 inched up 1.2%.



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