The Eurozone economy regained some momentum at the end of the first quarter, expanding at the fastest rate since December. Markit’s flash Eurozone PMI®, which tracks changes in business activity across the region, rose from 53.0 in February to 53.7 in March. The improvement was a welcome reversal of the declines seen in the prior two months.
However, despite the rise in March, the average PMI reading for the first quarter of 53.4 was the lowest quarterly trend for a year, signalling a slight slowing in the pace of economic growth.
The upturn in March was led by services, where business activity growth revived from February’s 13-month nadir to reach a three-month high, aided by a marginal uplift in new business growth. Expectations about the year ahead also rose in the service sector, reaching the second-highest seen in the past 11 months.
Manufacturing once again lagged behind services, but also saw growth of output and new orders accelerate slightly, improving on the 12- and ten-month respective lows seen in February.
Overall growth of new orders accelerated marginally from the one-year low seen in February as a result, but other indicators from the survey were less positive.
Employment showed the smallest monthly increase since last September and backlogs of work, a key gauge of existing orders that firms have not yet completed, barely rose.
Headcounts showed the smallest increase for six months in services and 16 months in manufacturing, as firms in both sectors remained cautious about the outlook and keen to keep costs down.
Prices meanwhile continued to fall. Average input costs dropped slightly for a third successive month, helping drive down average prices charged by firms for their goods and services at the second-fastest rate seen for just over a year, the rate of decline easing only marginally compared to February.
By country, Germany again saw robust growth, although the rate of expansion was unchanged from February’s five-month low. New order growth was the weakest for eight months and job creation was the slowest for 11 months. Manufacturing output rose only modestly although services expansion remained solid. France saw business activity rise again after sliding into contraction in February, with modest revivals seen in both manufacturing and services. However, the overall rate of growth remained only modest and job creation edged closer to stagnation.
Elsewhere in the region, the rate of business activity growth improved on February’s five-month low, but nevertheless rounded off the slowest quarterly expansion seen for a year.