LONDON (Reuters) – Manufacturing activity in the euro zone contracted again in February but output rose for the first time since May amid improvements in supply chains, according to final results from S&P Global’s survey of purchasing managers released Wednesday.

The PMI manufacturing index stood at 48.5 in February, in line with the preliminary estimate, after 48.8 in January. However, it still remains below the 50 mark separating growth from contraction in activity.

An index measuring production, which is part of the composition of the composite PMI, expected on Friday and considered a good indicator of overall economic health, came out at 50.1, against 48.9 indicated in the first estimate.

“Even a marginal expansion in output reported by manufacturers in the euro zone in February is welcome news as it represents the first increase since last May and a further improvement in the underlying trend from the trough seen in October. “said Chris Williamson, chief economist at S&P Global.

“The more positive picture in production primarily reflects a general improvement in supply chains, with product deliveries to factories accelerating on average at a rate not seen since 2009,” he added.

This recovery in supply has led to a further sharp reduction in the costs faced by the factories. The “input” price index fell to 50.9, its lowest level since September 2020, against 56.3 in January. The “output” price index, on the other hand, remained high.

A possible easing of price pressures could be welcomed by officials of the European Central Bank (ECB), keen to bring inflation back towards 2% in the medium term.

(Report Jonathan Cable; Claude Chendjou, edited by Kate Entringer)

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