Eurozone business activity robust but slips off highs

Business activity in the 18-nation eurozone stayed robust in February but slipped off its highs, a reminder that the economic recovery remains fragile, a key survey showed on Thursday. Markit Economics' said its Eurozone Composite Purchasing Managers Index (PMI) for February fell to 52.7 points in February from 52.9 in January. Analysts polled by Dow Jones Newswires had expected this leading indicator to give a reading of 53 points. Despite the fall, the reading remained above the 50-points growth-downturn line for an eighth month running, Market said. “A dip in the eurozone PMI provides a reminder that the region's recovery continues to be uneven and fragile," chief Markit Economist Chris Williamson said. "The slight easing in growth is disappointing, but it?s too early to read too much into one month's data," Williamson said. He said that taking January and February together, the PMI readings suggest the eurozone economy should grow 0.5 percent in the first quarter of the year. The bloc expanded with 0.3 percent growth in the last three months of 2013, after 0.1 percent in the third quarter and 0.3 percent in the second, when it finally escaped a record 18-month recession. Markit's Eurozone Services PMI edged up to 51.7 points in February from 51.6 in January while the Manufacturing PMI dropped sharply to 53 points from 54. Williamson noted that growth "continued to be led by Germany, which contrasts with a worrying renewed downturn in France," despite a better export performance. This "suggests there is a risk of the French economy contracting again in the first quarter," he said. “Unemployment looks set to remain a worry, as companies report ongoing pressure to keep headcounts down to reduce costs and boost competitiveness," he noted, while prices also continue to fall. Price pressures have eased steadily in the past year and reflect, at least in part, weak consumer demand. James Howat at Capital Economics said the figures suggest "the recovery is struggling to gather pace" and estimated first quarter growth at around 0.3 percent. "All this suggests that, while the eurozone recovery continues, it is still struggling to gain enough pace to solve the region’s debt problems or erode the ample spare capacity in the economy," Howat said. but