Business activity in the Eurozone expanded last month for the first time since May 2023. However, the recovery was uneven, as the services industry experienced a stronger-than-expected upturn while the manufacturing sector faced a deeper downturn.
Read more: Eurozone inflation drops to four-month low of 2.4 percent in March 2024
According to a survey reported by Reuters on Thursday, The composite Purchasing Managers’ Index (PMI) for the Eurozone, compiled by S&P Global and regarded as a reliable measure of overall economic health, increased to 50.3 in March from February’s 49.2. This improvement surpassed the initial estimate of 49.9 and moved the index above the 50 mark, indicating growth rather than contraction.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, commented on the positive development, stating, “Finally, some good news again. The service sector in the Eurozone is gradually finding its footing, with activity stabilizing in February and showing signs of moderate growth in March.” The services PMI rose to 51.5 from 50.2, surpassing the flash estimate of 51.1 and reaching its highest reading since June.
Manufacturing downturn deepens
However, a separate survey released on Tuesday revealed that the downturn in manufacturing had worsened last month, although there were tentative indications of a recovery. Demand for services increased, with the new business index rising from 49.8 to 51.4.
De la Rubia added, “It’s particularly encouraging to note that new business has resumed growth after an eight-month dry spell. This favorable trend is expected to persist, fueled by wage growth outpacing inflation, thus bolstering the purchasing power of households.”
The return of the services industry to growth has generated overall optimism about the year ahead. The composite future output index soared to 61.8 from 60.5, reaching a level not seen in over two years.
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