March data indicated subdued growth momentum across the U.S. manufacturing sector, thereby continuing the trend seen throughout 2016 to date. At 51.4, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) was up fractionally from 51.3 in February, but still well below the post-crisis average (54.1).

Moreover, looking at the average PMI reading for Q1 as a whole (51.7), the headline index pointed to the weakest improvement over any quarter since Q3 2012.

Slightly stronger rates of output, new business and employment growth helped to support the headline index in March, while a key factor weighing on the headline index was the sharpest decline in pre-production inventories since January 2014.

Although manufacturing production growth picked up from the 28-month low recorded in February, the latest rise was only marginal and one of the weakest seen over the past two-and-a-half years. Anecdotal evidence from survey respondents suggested that relatively subdued demand conditions and, in some cases, efforts to streamline post-production stocks, had acted as a headwind to output growth in March.

New business volumes continued to increase across the manufacturing sector, but the latest expansion was only slightly faster than in February and still weaker than the post-crisis trend. Survey respondents noted that lower capital spending across the energy sector and subdued export demand had weighed on overall new order growth. Reflecting this, latest data indicated that new work from abroad was unchanged in March, following a marginal decline during the previous month.

Despite ongoing weak new business and output growth, the latest survey highlighted a modest rebound in manufacturing job creation from February’s five-month low. Companies reporting a rise in payroll numbers mainly cited long-run expansion plans and efforts to lower their backlogs of work.

Manufacturers signalled a further reduction in their inventory volumes in March. The latest fall in stocks of finished goods was the fastest since November 2015, while pre-production inventories declined at the steepest pace for over two years. At the same time, input buying rose at only a modest pace and supplier performance was reported to have deteriorated slightly.

On the prices front, the latest survey indicated that manufacturers’ average cost burdens dropped for the seventh month running. However, the rate of decline was only fractional and the slowest over this period. Reduced operating costs and strong competition for new work in turn resulted in price discounting across the manufacturing sector during March. Although marginal, this was only the second instance of falling output charges recorded by the survey over the past three-and-a-half years.

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.