Eurozone Growth Rebounded in February Ahead of Ukraine's Invasion, PMIs Show

By Maria Martinez Eurozone economic growth regained momentum in February to reach its strongest pace since last September, according to the latest purchasing managers index by IHS Markit.

After slumping in January to an 11-month low, the eurozone composite PMI rose to 55.5 in February from 52.3 in the previous month.

Expansions were strong across both manufacturing and services, with a more substantial rebound in services driving the resurgence in growth at the composite level, IHS Markit says. The eurozone services PMI rose to 55.5 in February from 51.1 in January, signaling the strongest expansion in services output in three months.

The easing of coronavirus restrictions drove a revival in spending on consumer-facing services. Demand growth accelerated and hiring was stepped up as firms reported brighter prospects, economists at IHS Markit said.

However, business activity continued to be constrained both by supply-chain bottlenecks and labor shortages. Prices rose to the greatest extent yet recorded in almost a quarter of a century of data collection, according to IHS Markit data.

"Although some of these constraints will ease as the Omicron wave ebbs, energy and other commodity prices are spiking higher again due to the conflict in Ukraine, meaning the risks are heavily tilted toward inflation running even higher and persisting for longer than previously expected, squeezing household budgets," IHS Markit warns.

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