Euro Zone Service Sector Contracted In February

The euro zone's service sector contracted unexpectedly in February, increasing fears of a recession.

Euro zone Services Purchasing Managers' Index (PMI), released by Markit, fell to 49.4 in February from 50.4 in January, below the forecasted level. A reading below 50 indicates a contraction.

Euro zone manufacturing PMI rose to 49.0 from January's 48.8, but still remained below 50 for the seventh consecutive month. Factory output PMI was unchanged at 50.4, but new orders fell for the ninth successive month.

Germany, Europe's biggest economy, saw both its manufacturing and service sector PMI shrink. By contrast, France, the second largest economy in Europe, saw its manufacturing PMI increase on strong exports, while its service sector PMI fell to 50.3 in February from 52.3 in January.

According to the official data released last month, the euro zone unemployment reached 10.4 percent at the end of last year, its highest level since the introduction of the EU’s single currency.

Euro zone consumer confidence, however, rose for the second consecutive month in February as Europeans showed timid signs of increased spending.

Source: Bloomberg

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.