The eurozone continues to hold up better than expected in the face of repeated tariff shocks and subdued international demand for its exports. – joel saget/Agence France-Presse/Getty Images
Private-sector activity in the U.S. slowed in February as tariffs drove costs higher for firms, while Europe expanded at a stronger pace than anticipated as a rebound in industry signaled resilience against lingering headwinds.
The S&P Global Flash U.S. Composite PMI—based on a survey of around 650 manufacturers and 500 service providers—fell to 52.3 this month from 53.0 in January. A reading above 50 indicates activity continued to grow.
“Confidence remains subdued on the whole, as companies worry about the political environment and impact of policies such as tariffs, the latter once again blamed for widespread price rises,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Meanwhile in the eurozone, the composite index rose to 51.9 in February, from 51.3 a month prior. A consensus of economists polled by The Wall Street Journal expected a reading of 51.5.
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 more than 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, which sponsors the survey.
“Companies in both the service sector and the manufacturing industry are also quite optimistic about the next 12 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 also is 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.
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 also could come to weigh on activity.
Write to Don Nico Forbes at don.forbes@wsj.com