PMI drops to 14-month low in March
Leading data suggests that the Euro area’s economic momentum weakened notably in March, ending the first quarter on a sour note. The preliminary Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, fell from 57.1 in February to 55.3 in March. The result undershot market analysts’ expectations of a softer dip in the index to 56.7. Despite the fall, the composite PMI still lies well above the 50-threshold, signaling expanding business activity in the Eurozone.
Production growth weakened in both the manufacturing and services sectors fueling the PMI’s decline this month. New orders fell in both sectors, with orders from abroad growing at the slowest pace since November 2016—likely hurt by a strong euro. Job creation also lost momentum, although remained robust in the context of historical data. Business sentiment also slipped in both the manufacturing and services sectors in March.
Regarding the two largest Eurozone economies, the composite PMIs were also downbeat, falling in both France and Germany. The composite PMI came in at a seven-month low in France and an eight-month low in Germany. Moreover, elsewhere in the region business activity came in at a five-month low.