The Eurozone manufacturing sector downturn continued in February despite the stabilisation seen in Germany, according to data published this morning by Markit.

Although there was an upswing in new exports, especially in Germany, all of the other countries with the exception of Ireland registered contractions in the manufacturing sector. Nonetheless, only Italy fell below expectations.

The Markit manufacturing purchasing managers' index (PMI) for the Eurozone came in at 47.9, beating the consensus forecast of 47.8.

"The headline PMI signalled a deterioration in business conditions for the nineteenth successive month, but the rate of contraction remained one of the weakest seen during the past year," Markit noted in the report.

Markit's Chief Economist Chris Williamson made some optimistic comments on the data. "While the manufacturing sector is likely to have again acted as a drag on the overall economy in the first quarter, causing gross domestic product to fall for a fourth consecutive quarter, there are signs that the downturn has become less severe," he said.

However, Williamson went on to point out that "the concern" is of the divergence between stronger countries like Germany that is buoyed up by exports and resilient domestic demand while the "deteriorating domestic demand is holding back the economies of France, Italy and Spain."

JM

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