Eurozone Private Sector Expands For Third Month

(RTTNews) - Eurozone private sector expanded for the third straight month in March as manufacturing production increased for the first time in two years, joining services in growth territory, data from S&P Global showed on Monday.

The HCOB flash composite output index ticked up to 50.4 in March from 50.2 in February. The score has remained above the threshold 50.0 indicating expansion for the third successive month.

Although only marginal, the latest growth was the fastest since August.

The overall increase reflected growth across both manufacturing and services. Service providers reported growth for the fourth straight month but the expansion was the weakest in this sequence. At the same time, manufacturing production returned to growth. At 50.4, the flash services Purchasing Managers' Index dropped unexpectedly to a four-month low from 50.6 in February. The score was forecast to rise to 51.2.

The flash factory PMI hit a 26-month high of 48.7 from 47.6 in February. The score was above the expected level of 48.3.

The survey showed that new business in the euro area has fallen in each of the past ten months, with the pace of reduction little-changed since February. New export orders also decreased and the pace of decline was the joint-weakest since May 2022.

With rising output, companies brought an end to a period of job shedding stretching back to August 2024. Staffing levels were broadly unchanged since March.

The rate of input cost inflation softened in March, ending a five-month sequence in which the pace of increase had quickened. Selling prices also increased at a slower pace, with the pace of inflation the weakest in the year-to-date.

There was a less pronounced scaling back of purchasing activity in the manufacturing sector. The fall in input buying was solid and the weakest since August 2022.

Stocks of both purchases and finished goods decreased again. Further, suppliers' delivery times shortened to the greatest extent in nine months.

Business sentiment fell for the second straight month in March. Confidence regarding the twelve-month outlook was the lowest since last November amid waning optimism in both manufacturing and services.

"Just in time with the beginning of spring we may see the first green shoots in manufacturing," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"There is some likelihood, that Europe seizes the opportunity and shows more unity with respect to reforms, defense spending, and completing the capital market union, to name a few things," de la Rubia added.

This could send a clear message that Europe's position as a key business hub is set to strengthen in the years ahead, the economist said.

Growth was sustained in Germany, in part thanks to a renewed expansion in manufacturing output. By contrast, business activity in France decreased for the seventh straight month, albeit with the pace of contraction easing from that seen in February.

Germany's private sector grew at the fastest pace in ten months in March amid a robust rebound in manufacturing production. The flash HCOB composite output index rose to 50.9 in March from 50.4 in February.

The improved performance in March reflected a renewed increase in manufacturing production. Meanwhile, the service sector lost momentum. The services PMI fell to 50.2 from 51.1 in the previous month. Moreover, this was weaker than economists' forecast of 52.3.

The manufacturing PMI climbed to 48.3 in March from 46.5 a month ago. The score was seen at 47.1.

France's economic downturn continued in March but the pace of decline slowed moderately driven by tentative signs of recovery in the manufacturing sector. The HCOB composite output index posted a two-month high of 47.0 in March, up from 45.1 in February.

The services PMI rose more-than-expected to 46.6 in March from 45.3 in the prior month. The reading was seen at 46.3.

At 48.9, the factory PMI hit a 26-month high and climbed from 45.8 in February. The score was forecast to improve to 46.2.