The Eurozone Purchasing Managers’ Index (PMI) for the manufacturing sector posted a rise in February to hit the three-year high, a London-based global data company revealed on Monday.

According to an IHS Markit report, it rose to 57.9 last month from 54.8 in January.

“The eurozone’s manufacturing economy performed strongly in February as operating conditions improved,” the report said.

Sector data signaled solid growth across the consumer, intermediate and investment goods categories, it noted.

“Investment goods producers registered the strongest growth since January 2018, followed by intermediate goods.”

The eurozone/euro area, or EA19, represents member states that use the single currency, euro.

Except Greece, where the PMI slid back just below 50, the pickup in manufacturing growth in February was broad-based with all nations posting stronger PMI readings compared to January.

“Germany and the Netherlands, where export gains remained especially strong, continued to lead the way in terms of overall growth,” the report said.

The headline eurozone manufacturing PMI was driven higher by sharper gains in both output and new orders, it added, saying stronger exports were a main driver of all new order gains.

Cost pressures

According to February’s survey, there was the continued lengthening of delivery times for inputs, with the data indicating the second-greatest downturn in lead times since data were first available nearly 24 years ago.

Delays and difficulties in sourcing inputs resulted from an upturn in global demand and ongoing transportation hurdles related to the virus, and input costs remarkably increased sharply with inflation reaching its highest record for nearly a decade.

Commenting on the latest EU manufacturing PMI data, Chris Williamson, chief business economist at IHS Markit, pointed out the problems as demand for inputs have not met by supply yet.

“The PMI has reached a three-year high to run at a level that has rarely been exceeded in more than two-decades of survey history – notably during the dot-com bubble, the initial rebound from the global financial crisis and in 2017-18.”

However, the growth spurt has created its own problems with demand for inputs not yet being met by supply, he said.

“Prices paid for inputs are consequently rising at the fastest rate for nearly a decade, hinting at further increases in consumer price inflation in coming months, at least until supply and demand come back into balance.”

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