Eurozone: Business activity in March recovers the momentum lost in February
March 22, 2016
Business activity in the Euro area ended the first quarter on a positive note, suggesting that the extra stimulus from the European Central Bank may already be having a positive effect. The preliminary Eurozone Composite Purchasing Managers’ Index (PMI), elaborated by Markit, rose from a revised 53.0 in February (previously reported: 52.7) to 53.7 in March. The result overshot the 53.0 the market had expected and, according to Markit, “the Eurozone economy regained some momentum at the end of the first quarter, expanding at the fastest rate since December.”
The increase in March reflected an upturn in services and faster growth in manufacturing. That said, Markit noted again that business activity in the manufacturing sector continued to lag behind services. Activity in services revived from February’s 13-month low to reach a three-month high in March, supported by an improvement in new business growth. Moreover, firms’ expectations regarding the sector in the next 12 months also rose in March. Meanwhile, the increase in manufacturing was buttressed by a rise in new orders. Moreover, employment continued to grow in March, although Markit indicated that the increase was the smallest since September 2015 due to backlogs of work.
Regarding the two largest Eurozone economies, the Composite PMI in Germany stabilized in March at February’s level, which continued to signal strong growth. Meanwhile, the French Composite PMI rose in March after having fallen to contractionary territory in February. Elsewhere in the region, the rate of growth in business activity improved in March.
Author: Ricardo Aceves, Senior Economist