Euro Area: February flash PMIs maintained a positive stance

In February, the Euro Area composite PMI index rose to 51.9 from 51.3 ( chart s 1 and 2 ) , in line with our expectations . The Manufacturing index has crossed the 50 thresholds to 50.8 for the first time since October 2025, continuing its improvement. The Services index remained virtually stable at 51.8. The survey details highlight an improvement in all sub-components in the manufacturing sector, with a particularly marked i ncrease in order books and production over the past two months. In the services sector, the index was mainly supported by current activity, while leading indicators such as new orders and employment suggest that activity is slowing slightly. The figures released today align with our expectations of sustained economic activity for the first quarter (+ 0.3% Q/Q ) . Our PMI based model ( chart 3 ) – which tends to underestimate growth in recent quarters - anticipated Euro area GDP growth at 0.2% Q/Q while our Nowcasting model expects 0.4% Q/Q this quarter Germany: February's PMI flash estimate came in above expectations at 53.1 after 52.1 . The Manufacturing index crosse d the 50 thresholds for the first time since June 2022. Both Manufacturing and Services index improved in February by 1.6 pt and 1 pt, respectively . More specifically, new orders, Employment and Output improved significantly over the last months. For services, it is worth noting the strong increase we see in business expectations, which jumped to 60.6 on average in Jan-Feb compared with 54 in Q4. Overall, the print of this month is in line with our view of stronger German economic activity in Q1 compared to Q4 that we see at 0.5% Q/Q after 0.3%. France: The composite French PMI for February increased to 49.9 (Consensus: 49.6, Natixis: 50.1) from 49.1. Services PMI bounced back to 49.6 from 48.4 while the manufacturing PMI decreased to 49.9 from January’s near four-year high (51.2). The composition of the index is rather weak, with news orders broadly unchanged at 47.0 and the employment component slightly lower at 50 for the composite index. PMIs are not the most reliable survey for forecasting French GDP and INSEE surveys, which will be released next week, will be more scrutinised. We expect French GDP growth to rise of around 0.2 to 0.3% in the first quarter and by 1.1% in 2026.