Eurozone retail sales unexpectedly slipped in January
Despite improving consumer confidence at the start of the year, retail sales fell 0.1% month-on-month, defying expectations of a 0.3% increase and marking the first drop in in five months. The fall was driven by weaker non-food product and automotive fuel sales, down 0.2% and 1.1% respectively.
Meanwhile, food, drinks and tobacco sales grew 0.3%. Year-on-year growth accelerated to 2.0% from 1.8% in December, above economists’ forecast of 1.7%. Looking ahead, the outlook is clouded by rising geopolitical uncertainty and higher energy prices following US and Israeli strikes on Iran.
US factory activity expanded again in February
The Institute for Supply Management (ISM) reported that that its manufacturing purchasing managers’ index (PMI) eased slightly to 52.4 in February from January’s 52.6, defying economists’ expectations for a dip to 51.8.
A reading above 50 signals expanding activity. The modest pullback reflected slower growth in production and new orders, with the production index dropping to 53.5 in February from 55.9 in January and new orders slipping to 55.8 from 57.1.
The ISM also reported that the employment index inched up to 48.8 in February from 48.1 in January, remaining in contraction, while the prices index surged to 70.5 from 59.0, its highest reading since June 2022.
UK manufacturing strengthens as services ease slightly
The S&P Global UK Composite PMI held at 53.7 in February, matching January’s 17-month high but coming slightly below the flash estimate of 53.9. The reading pointed towards another solid month of private sector expansion, with manufacturing output growing its quickest pace since September 2024 and helping offset a slight easing in services activity.
Employment continued to contract, heading for a 17th consecutive monthly drop, while price pressures softened as both input costs and output charges rose at a slower rate.
The Service PMI remained firm at 53.9 in February, a modest tweak from January’s five-month high of 54.0. The figures were supported by gradually improving demand, though growth in the new business moderated and was mainly driven by stronger domestic demand. Firms cited weak conditions across Europe, while gains were more commonly linked to the US and emerging markets.
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