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Exceeding predictions of 49.5 and up from 49.1 in January, Germany's flash manufacturing PMI soared to 50.7 in February 2026—the first growth for the sector since June 2022. This rebound drove the Eurozone's flash manufacturing PMI to 50.8 (from 49.5), its highest level in 44 months and much beyond forecasts. Rising manufacturing production to multi-year highs, strong new orders, and Germany's first order backlog rise since mid-2022 drove the recovery, which points to a shift toward commodities manufacturing in response to increasing foreign demand.
Driven by rapid services expansion at 53.4 (a four-month high), composite PMIs also improved as Germany's rose to 53.1 (beat estimates of 52.3) from 52.1. Rising from 51.3 to 51.9, the Eurozone composite showed 14 straight months of growth and the quickest rate in three months. Although services made small gains, manufacturing's momentum surpassed it in certain areas; still, cautious hiring caused a little drop in employment despite stable backlogs.
Though weak orders and nominal job losses temper full optimism, the optimistic statistics relieves recession worries for Germany and the larger Eurozone, therefore suggesting possible Q1 GDP growth should the trend persist. Led by Germany, the manufacturing recovery holds hope for sustained recovery and could push the ECB to monitor for sustained strength before modifying its policy, fueled by foreign demand.
