February was not quite so good for UK plc, but it was good for the Eurozone.

We now have the full set.

Wednesday brought with it purchasing managers indexes – PMIs – tracking manufacturing around the world. The data was good, especially so for certain euro countries including Holland, Austria, Spain and Germany. It was good for the UK too, but not quite as impressive – and the global manufacturing index rose to a 60-month high.

Thursday, brought with it the latest purchasing managers index tracking UK construction, the index rose very slightly from an okay reading of 52.2 in January to a reading of 52.5 in February, but with data also pointing to cost pressures rising to an eight and half year high.

But Friday gave us the PMIs tracking services.

For the Eurozone, they were good – with the index coving the region rising to 56.0, a six-year high. By the way, to put that reading in context, any score over 50 is meant to suggest growth. But the equivalent index for the UK fell to 53.3, the weakest score since September last year.

Drilling down, across the Eurozone, we have readings for Ireland, Spain, Germany, France, and Italy. And the number that describes how many of these countries saw a worse performance than the UK is a lot like a doughnut, it is round fat and has a hole in the middle.

Ireland topped the pack, Italy was bottom, but it was a good show all round.

But cost inflation rose to a 69-month high.

Chris Williamson, Chief Business Economist at IHS Markit said: “The broad-based improvement has pushed the Eurozone PMI into territory consistent with 0.6 per cent GDP growth in the first quarter. The labour market is also starting to boom, with jobs being created at the fastest rate for nearly a decade.”

As for the UK, the three PMIs suggest growth of around 0.4 per cent.

It is interesting to speculate on whether the recovery in the Eurozone may affect upcoming elections in Holland– which appears to be booming, according the PMI tracking manufacturing in the Netherlands – France, and Germany.

Interest rates

As for the implications for interest rates, looking at the Eurozone first, Chris Williamson said: “The acceleration in growth, employment and prices signalled by the surveys suggests that analysts will begin to pull forward their expectations of when the ECB could begin tapering its stimulus. However, it seems likely that central bank rhetoric will remain dovish in coming months, focusing on the headwinds that the economy faces in 2017, and specifically the need for policy to remain accommodative in the face of political uncertainty.”

But look at the UK, he said: “Exchange rate depreciation, rising energy costs and higher wage bills all had a profound impact on prices charged inflation, which was the highest since September 2008. Cautious consumer spending had a moderating impact on pricing power, but firms were still compelled to increase their charges to customers in anticipation of more cost pressures to come. This will have policymakers wondering whether consumers can continue spending as Brexit negotiations approach, or whether they rein back further in response to squeezed household budgets.”

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