The euro zone manufacturing sector slowed down again in February, highlighting the weakness in the peripheral economies that are dragging down the overall region.
The purchasing managers’ index (PMI) for the manufacturing sector gave a reading of 49.0 in February, which was unchanged from an earlier flash estimate. This figure is below the 50 threshold which signifies a contraction, as opposed to expansion if it is over 50.
The data complied by Markit Economics show that slowest pace of contraction in six months, indicating some stabilization in the sector.
“Euro-area manufacturing looks to be stabilizing after sliding back into contraction late last year. But there is still lots to worry about,” said Chris Williamson, chief economist at Markit.
“Whether the euro zone will sink back into recession in the first quarter remains highly uncertain,” he added.
The countries reporting contraction in manufacturing activity in February were Greece and Ireland, which are two of the euro zone countries which received bailouts after their borrowing costs spiraled out of control. The other two countries are Spain and Italy, two other highly indebted countries that investors fear could need financial aid in future.