Eurozone growth trends diverge: survey

(BRUSSELS) - Private sector business activity across the eurozone grew in February for a seventh month running, but with an accelerating divergence between manufacturing and a slowing services sector.

The final purchasing managers' index (PMI) for the 16 countries that share the currency, compiled by data and research group Markit, remained unchanged on 53.7 points, after slipping the previous month, Markit said.

Any score above the boom-and-bust 50-point line indicates economic growth, but surging manufacturing expansion is not being matched in the all-important services sector, where the index slipped to 51.8 from 52.5 in January, lower than the initial estimate.

Germany, France and Italy were the only countries among the 16 nations that share the euro to show an increase in services output.

The manufacturing score hit 54.2 points, its highest level since August 2007, up from 52.4 points.

"Not only has the divergence widened between the surging manufacturing and struggling service sectors, but national trends continue to worry," said Markit chief economist, Chris Williamson.

"Robust growth in France and Germany contrasts with a deepening downturn in Spain.

"These divergences raise concerns about the sustainability of the recovery, as well as posing difficult questions for policy-makers.

"Services are clearly struggling to enjoy any spill-over benefits from the more robust growth we are currently seeing in manufacturing.

"Gross domestic product growth, and the sustainability of the upturn, are at risk from this renewed weakness," he underlined.

The picture is causing concern among close watchers, with IHS Global Insight analyst Howard Archer adding: "Eurozone economic activity is clearly struggling to kick on in the face of still significant economic and financial headwinds."