Euro Area Manufacturing Gains Momentum as Services Activity Slows

The euro area's manufacturing sector showed signs of strengthening in February 2026, while services activity stalled, according to Commerzbank economists. The flash PMI readings for the currency bloc indicate that manufacturing output returned to growth, driven by improving new orders and export demand.

In contrast, the services sector, which had been a key driver of economic resilience through 2025, saw its activity index dip closer to the stagnation threshold, reflecting softer consumer demand and a cooling in business services. Commerzbank's analysts noted that the manufacturing uptick is a welcome shift after a prolonged period of contraction, but they cautioned that the recovery is still fragile and heavily reliant on external demand.

The mixed signals complicate the European Central Bank's assessment of the economy. With manufacturing improving but services weakening, the overall growth picture remains subdued. Commerzbank economists argue that the ECB is likely to hold off on further rate hikes until there is clearer evidence that the services sector is stabilizing.