BRUSSELS - Euro zone business activity fell for the ninth month in a row, but the rate of decline eased further from January, a closely-watched survey showed on Feb 22.

The HCOB Flash Euro zone purchasing managers’ index (PMI) published by S&P Global recorded a figure of 48.9 in February from 47.9 in January. A figure below 50 indicates contraction, and this is the smallest rate of decline since June 2023.

Some economists said the data showed the 20-nation single currency area was moving slowly towards recovery, while others said the figures mean the European Central Bank (ECB) will not cut interest rates soon.

“There is a glimmer of hope as the euro zone inches towards recovery. This is particularly noticeable in the services sector,” Mr Norman Liebke, economist at Hamburg Commercial Bank, said.

The latest PMI for the services sector is now 50 points, meaning it has stopped contracting for the first time since July 2023.

Mr Andrew Kenningham, chief Europe economist at Capital Economics, said the data showed that the euro zone is “still struggling” and did not “dramatically change the picture” for the Frankfurt-based ECB.

“It does mean that there is a growing chance that the ECB will wait until June to cut interest rates rather than doing so in April as we are currently forecasting,” he said in a note.

Mr Liebke of Hamburg Commercial Bank also believed the figures were likely to disappoint the ECB, and said he expected a rate cut in June.

Concerns also remain over the euro zone’s biggest economy, Germany.

“Germany is acting as a brake on euro zone growth,” Mr Liebke said, pointing to France’s services and manufacturing sectors recovering “more strongly”.

“Germany is lagging behind,” he said. “The services export sector in particular boosted France in February, while it slowed down Germany.”

He said a possible explanation for this could be increased tourism activity, which France benefits more from than Germany. AFP