Business activity in the eurozone slowed in February, as growth rates in core economies France and Germany dipped, but business optimism from the region's purchasing managers moved higher.
After reaching a near 12-year high in January, business activity levels remained elevated in February, but the pace of growth cooled, reflecting an easing in the pace of new orders, which slipped to a five-month low.
Purchasing manager index (PMI)
The composite PMI of manufacturing and services dropped to a three-month low of 57.5 in February, down from 58.8 in January, and missing expectations of a dip to 58.5.
“It remains to be seen if growth will continue to slow in coming months," said Chris Williamson, chief business economist at IHS Markit which compiles the PMI surveys.
"However, a rise in business optimism about the year ahead to a joint-survey high bodes well, suggesting that companies are expecting the slowdown to be short-lived."
The powerhouse of eurozone economic strength in this economic cycle has been Germany, and its business activity also saw some slowing in February - but from a very highly-elevated position.
It's composite PMI slowed to a three-month low of 57.4 in February, down from a near seven-year high of 59 in January.
"The slower overall pace of growth in February was driven by both the manufacturing and service sectors," said Phil Smith at IHS Markit.
"This was the case for not only the headline output numbers but also employment and inflows of new orders."
Price pressures in the eurozone remained elevated, despite the dip in overall activity. Higher prices were linked to improved pricing power as consumer demand accelerated thanks to improving wage growth.
The steepest rises were seen in manufacturing, where factory gate inflation - the price rises passed on from producer to retailer - showed the largest increase since April 2011.
The dip in business activity did little to suppress optimism in the year ahead, however, as the expectations index ticked higher for a third-successive month to reach the joint highest level recorded in the survey.
"The PMI appears to have lost momentum at the start of the year following a sustained run of strong gains, but still signals firm growth in the economy," said Claus Vistesen at Pantheon Macroeconomics. "On the positive side, however, business mangers’ expectations remained close to all-time highs."
While the euro continued to give way to a resurgent dollar, the single currency mounted gains against both the pound and the yen, up 0.12% to £0.8827 and 0.07% to Y132.51 respectively.
Stock markets, however, were retracing a little after gains seen in five of the previous seven sessions.