Eurozone Business Activity Picks Up Faster Than Expected

Don Nico Forbes

Fri, February 20, 2026 at 8:06 PM GMT+9 2 min read

The La Defense business district seen behind the Arc de Triomphe in Paris. - joel saget/Agence France-Presse/Getty Images

Private-sector activity in Europe expanded at a stronger pace than anticipated in February, driven by a rebound in industry as economies across the continent continue to prove resilient against lingering headwinds.

Data firm S&P Global said Friday that its measure of activity at manufacturers and service providers in the eurozone rose to 51.9 in February, compared with 51.3 a month prior. A consensus of economists polled by The Wall Street Journal expected a reading of 51.5.

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A reading below 50.0 signals a decline in activity, and a reading above that level indicates an expansion.

Eurozone activity was boosted by a strong uptick in manufacturing, which returned to positive territory for the first time since August and marked its highest reading in three-and-a-half years.

German industry, which is benefiting from the rollout of government stimulus following years of stagnation, led the rebound.

“GDP in Germany is likely to have grown visibly in the first quarter,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

“Companies in both the service sector and the manufacturing industry are also quite optimistic about the next twelve months which bodes well for GDP growth of more than 1% this year,” he said.

The eurozone continues to hold up better than expected to repeated tariff shocks and subdued international demand for its exports. While activity is largely being driven by increased government investment, a shift in focus toward domestic demand is also supporting stabilization against an uncertain global backdrop.

“Barring any unexpected short-term volatility, euro area activity is expected to gradually recover, supported by domestic demand,” the European Central Bank said in an economic bulletin published Thursday.

In the U.K., business activity neared a two-year high, with a surge in manufacturing activity driven by a postpandemic record in export orders.

Similar surveys pointed to accelerations in India and Japan, though private sector growth lost momentum in Australia.

The global economy expanded more strongly than expected in 2025, with momentum set to continue. The International Monetary Fund has projected global growth of about 3.3% for 2026.

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Still, the outlook remains fragile, with economists sounding caution over the longer-term effects of trade conflicts. The IMF estimates that severe trade fragmentation could hit global gross domestic product by up to 7%.

Meanwhile, uncertainty over the durability of the artificial-intelligence investment boom could also come to weigh on activity.

Write to Don Nico Forbes at don.forbes@wsj.com

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