Intermoney | On the European continent, we will be looking forward to the activity data that will be offered by the preliminary PMI readings for February. For the first time in several months we will see readings above 50 in several economies and in the eurozone as a whole, especially in the indicators for services and the composite indicator, while in manufacturing activity the PMIs will again show a very slight contraction. The drop in energy prices continues to be one of the factors driving the indicators to expansionary levels for the first time since the summer. On Friday, natural gas prices were below €50/MWh after the Dutch benchmark TTF fell more than 5% during the session.
While German industry is being hit harder, as could be seen in the latest GDP and industrial production data, other economies such as France and Italy have managed to hold up better.
It is true that in terms of manufacturing activity in the eurozone, the sharp decline in natural gas prices, as well as warmer than normal winter temperatures, lower inflation, and the reopening of China, are all factors that are pushing up expectations for the future as well as the current level of demand. But we should not overlook the negative factor that the arrival of cold weather would have on energy prices, which is one of the main risks facing manufacturing activity on the old continent.