Euro-area factories cut prices at the fastest pace in almost three years in February, compounding an already worrisome inflation environment for the ECB.
Markit Economics said the price gauge of its manufacturing Purchasing Managers Index fell further below the key 50 level, dropping to the lowest since June 2013. All countries bar one in its monthly survey reported falling output prices, including Germany, France and Italy, the region’s three largest.
The report comes a day after data showed consumer prices in the euro region fell an annual 0.2 percent in February, the most in a year. With ECB policy makers due to meet next week, the mounting catalogue of negative numbers may prompt them to increase their stimulus programs again.
Chris Williamson said the report suggests that “deflationary pressures have intensified.”
“With all indicators — from output and demand to employment and prices — turning down, the survey will add pressure on the ECB to act quickly and aggressively to avert another economic downturn” .
The headline manufacturing PMI number slipped to 51.2 in February from 52.3 in January, signalling a slower pace of expansion. The reading was slightly above the initial estimate of 51 published on Feb. 22.