According to the report from IHS Markit, the eurozone’s private sector economy experienced a further modest drop in output during February. Seasonally adjusted Eurozone PMI Composite Output Index posted 48.8 in February, up from January’s 47.8 and also higher than the earlier flash reading.

The latest data again indicated a broadly two-speed economy. On the one hand, manufacturing registered its strongest expansion of output in four months, fuelled by strengthened demand from both domestic and international sources. In stark contrast, the service sector - especially those areas impacted the most by social-contact restrictions – recorded another marked contraction of activity.

The modest fall in activity was again closely linked to a decline in new orders. Latest data showed that new business fell for a fifth successive month, though February’s rate of contraction was marginal. This partly reflected the strongest increase in new export business for nearly three years.

On the employment front, there was some positive news as a net increase (albeit marginal) was recorded for the first time in 12 months. Growth in employment was however limited by ongoing spare capacity, as evidenced by a fall in levels of work outstanding in February. Although marginal, the latest cut in backlogs extended the current period of continuous decline to two years.

The Eurozone PMI Services Business Activity Index remained mired below the 50.0 nochange mark to signal a sixth successive monthly reduction in service sector activity. The index was little changed since January’s 45.4, recording 45.7 in February.