Business activity in the euro zone expanded last month for the first time since May 2023. However, the recovery was uneven, as the services industry experienced a stronger-than-expected boom while the manufacturing industry faced a further recession.
read more: Eurozone inflation rate falls to 2.4% in March 2024, the lowest level in four months
The eurozone's composite Purchasing Managers' Index (PMI), compiled by S&P Global and considered a reliable indicator of the overall health of the economy, was lower in March than in February, according to a study reported Thursday by Reuters. It rose from 49.2 to 50.3. This improvement was higher than the initial estimate of 49.9, and the index was above the 50 mark, indicating growth rather than contraction.
Commenting on this positive development, Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: The euro area's services sector is gradually gaining footing, with activity stabilizing in February and signs of moderate growth in March. ” The services PMI rose to 51.5 from 50.2, surpassing the preliminary figure of 51.1 and reaching its highest level since June.
Manufacturing recession worsens
However, a separate study released on Tuesday found that the manufacturing downturn worsened last month, despite tentative signs of recovery. Demand for services increased, and the new business index rose from 49.8 to 51.4.
Mr de la Rubia added: “It is particularly encouraging that new business has resumed growth after eight months of drought.” This favorable trend is expected to continue, driven by above-inflation wage growth, which strengthens household purchasing power. ”
With the services industry back on track for growth, there is overall optimism about the year ahead. The comprehensive future production index rose from 60.5 to 61.8, reaching the highest level in more than two years.
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