For the second day in a row European stock prices retreated as economic data showed unexpected weakness for February, with services and manufacturing output falling.
Despite the fact that, according to Markit Economics, February figures were “the second-highest of the past six months, and [suggest] that the eurozone economy has stabilized over the first two months of the year having contracted in the final quarter of 2011,” a contraction that drove Markit’s Eurozone Services Purchasing Managers’ Index below January’s 50.4 rattled investors.
Reuters reported that the contraction was lower than any forecast by respondents to one of its polls. Bloomberg, too, said that the median estimates by economists in its own poll had been for a PMI of 50.5. And in a separate report, declining factory orders in Germany led to a surprise February slowdown in expansion of services and manufacturing.
Still, Markit pointed out that January’s expansion was “the first month in which the Index had risen above the 50.0 no-change level since last August.”