- 50.2 and earlier
- Manufacturing PMI 45.7 vs expected 47.0
- Previously 46.5
- Composite PMI 49.9 vs. expected 49.7
- Previously 49.2
Once again, the divergence in the euro area's economic performance is clear. While service activity is recovering and improving, manufacturing has been left behind and remains in recession. But all things considered, the overall economy will be closer to stabilization, at least by the end of the first quarter. HCOB points out:
“If you were hoping for a rebound in manufacturing in the first quarter, it's time to give up. March's PMI confirms clear weakness in the sector, which is dominated by Germany, the dominant country. Production volumes fell at about the same pace as in the first two months of the year, and new orders continued their downward trend unabated. However, there is a silver lining: Companies remain uncertain about future production. I'm optimistic. Also, the index of finished goods inventories has risen for the second month in a row and is nearing a flat level. Reaching this point means inventory reductions will no longer be a drag on production.
“This is a time of humility and a time when modest month-on-month expansion is already good news. In this sense, the fact that the Services PMI has moved further into expansion territory at 51.1 is especially important after two consecutive months of growth. Similarly, the fact that new contracts increased for the first time in nine months is noteworthy and consistent with further improvement in business expectations.
“The European Central Bank can take some comfort from the fact that price pressures in the wage-sensitive services sector have not increased further. On the contrary, input cost increases have slowed somewhat, as have selling prices. , price pressures are still rising. Therefore, the PMI price news is not enough to change the ECB's apparent plan to cut rates in June rather than April.
“Comparing France and Germany, the composite PMI data shows about the same degree of weakness. However, there are two important differences. First, Germany's production index improved in March, while France's output worsened. Second, France's economic downturn is more widespread than Germany's, with both manufacturing and service sectors contracting. In Germany, however, only manufacturing is showing negative growth. , services are generally stagnant. None of this is encouraging, and both economies lag compared to the euro area economy as a whole.”
