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Enterprise within the eurozone declined once more in February regardless of the upturn in manufacturing

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A man in front of the desolate Trevi Fountain in Rome, Italy.

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LONDON – European business improved slightly in February but showed a sustained decline as Covid-19 social restrictions dragged on, according to preliminary data released on Friday.

The euro zone is still battling the coronavirus pandemic, with most countries restricting people's movements to curb the number of infections. At the same time, the introduction of vaccinations is still a long way from what European leaders would like to see in the face of bureaucracy, production and supply problems.

Still, IHS Markit's composite flash PMI for the euro area, which looks at activity in both manufacturing and services, rose slightly to 48.1 in February from 47.8 in January. A value below 50 means a contraction in activity.

In the services sector, which has been hardest hit by lockdowns and curfews, activity plummeted to a three-month low while manufacturing hit a 36-month high.

"The ongoing Covid-19 lockdown dealt another blow to the eurozone service sector in February, increasing the likelihood of another GDP decline in the first quarter," Chris Williamson, chief economist at IHS Markit, said in a statement.

"If you are building trains and planes, you have a hard time, but on the other hand there are a lot of activities around the world that benefit exporters," Williamson told CNBC's Street Signs Europe on Friday.

The European Central Bank estimates that the GDP of the euro area will increase by 3.9% in 2021. However, the prognosis depends heavily on how the pandemic develops, and there are fears that variants of the virus could further hurt economic growth if vaccines prove less effective for new strains.

French fighting

In France, business declined the fastest in three months in February. The country hasn't put in place a full third lockdown for fear the population won't fully comply with it, but other tough measures are such a curfew. The flash composite PMI was 45.2 down from 47.7 in January.

"The latest PMI data suggests that the French private sector continues to struggle amid the ongoing Covid-19 crisis," Eliot Kerr, an economist at IHS Markit, said in a statement.

German resilience

In Germany, the Flash Composite PMI reached a two-month high of 51.3 in February. The latest data showed a further contrast between the service sector and the manufacturing sector. While service activity fell to a nine-month low, manufacturing output rose to a 36-month high.

Phil Smith, deputy director at IHS Markit, said the numbers "indicate continued resilience in the German economy through the middle of the opening quarter, although the country remains under strict lockdown measures."

"The persistent weakness in services, where large parts of the sector are either closed or disrupted by virus containment measures, continues to be offset by strong export-led growth across manufacturing," he added.

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Katherine Clark