Eurozone private sector activity growth accelerated notably in February as COVID-19 containment measures were relaxed. The flash purchasing managers’ composite index for the eurozone, a closely-watch measure of the health of the manufacturing and services sectors, rose to 55.8 in February, up from 52.3 in January and the highest reading since September.

This was much stronger than the 52.7 forecast by economists. Most good news came from the manufacturing sector, which showed a further easing of supply chain problems. Backlogs of work are still increasing as demand continues to grow, helping production to recover.

Meanwhile, Germany’s most prominent leading indicator, the Ifo index, showed that German business sentiment improved in February across all sectors as hopes for an end to the coronavirus crisis more than offset worries about the Ukraine conflict, although a possible escalation remains a major risk.

The business confidence index advanced to 98.9 in February from 96.0 in the previous month. This was well above economists’ forecast of 96.5 and reached its highest level since September. Both the current assessment and the expectations components of the survey improved significantly.

“The German economy is betting on an end to the coronavirus crisis,” Clemens Fuest, Ifo president, said.

However, the escalation of the crisis engulfing Ukraine remains a risk factor.

Finally, British retailers reported slower sales growth in February but said demand was better than normal for the time of the year as the Omicron wave of coronavirus cases eased, according to a Confederation of British Industry (CBI) survey published on Thursday.

The CBI’s monthly retail sales balance halved to +14 in February from +28 in January, a bigger fall than economists’ forecasts for a small decline to +25. However, sales for the time of the year improved significantly in February from January, with the balance rising to +16 from -23.

“The easing of COVID-19 restrictions − including the end of work-from-home guidance – has unsurprisingly encouraged shoppers to return to the high streets,” CBI economist Martin Sartorius said.

This article has been prepared by Bank of Valletta plc for general information only.