German and French private-sector activity is growing again

The euro area’s two largest economies saw private-sector growth return, snapping months of contractions as easing supply shocks and an unusually mild winter provide respite.

S&P Global’s flash Purchasing Managers’ Index for Germany rose to 51.1 in February – much better than the 50.3 median estimate in a Bloomberg survey and the first time since June that the gauge was above the 50 threshold that signifies an expansion.

The French measure clocked in at a seven-month high of 51.6 – defying economist expectations for a fourth straight contraction.

A year after Russia attacked Ukraine, much of Europe has weathered the worst of the fallout and the 20-member euro zone looks increasingly likely to avoid a recession. Consumer confidence is at a one-year high and inflation – though still uncomfortably high – has moderated in recent months.

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Tuesday’s data show Germany’s economic rebound was broad based, though “with manufacturing new orders still in contraction territory, goods producers remain only cautiously optimistic about the year-ahead outlook,” S&P said.

In neighbouring France, “it’s difficult to say for certain if we’re at an inflection point and the French economy is now on its path to recovery,” senior S&P economist Joe Hayes said Tuesday in a statement.

“The manufacturing sector downturn intensified in February, and demand conditions within this sector are clearly still fragile,” he said.

The numbers follow a slight advance in Australia’s PMI and an unchanged growth reading in Japan. UK and US numbers later Tuesday are expected to show improvements, but still indicate contractions.--Bloomberg