According to the report from HCOB, business activity in the private sector of the eurozone improved again in March, exceeding economists' forecasts and reaching the highest level since June 2023, as a modest recovery of service sector output gained momentum.
The Eurozone Composite PMI Output Index rose in March to 49.9 points from 49.2 points in February. However, the index remains below the 50-point mark, which indicates a reduction in activity in the private sector, for the 10th month in a row. Economists had expected the index to rise to 49.7 points. The services PMI rose to 51.1 points (9-month high) from 50.2 points in February, while the manufacturing PMI fell to 45.7 points (3-month low) from 46.5 points. Economists had expected the services PMI to rise to 50.5 points and the manufacturing PMI to reach 47.0 points.
HCOB said that in March the manufacturing output fell across the eurozone for a twelfth successive month, with the rate of decline easing only slightly to register another month of steep contraction. New orders for goods likewise fell sharply by historical standards, though the fall was the slowest recorded over the past year. In contrast, service sector business activity rose for a second month in March after six months of decline. The overall pace of services expansion nevertheless remained well below the pace seen this time last year. The rise in new work was, however, notable in being the first recorded since last June. Meanwhile, private sector employment rose again in March (for the third month in a row), but the rate of growth slowed to only a very modest pace. As for the inflationary situation, growth of average input costs across the goods and services sectors slowed in March, with the pace of overall cost inflation down to a 3-month low. Selling price inflation likely moderated in March, cooling for the first time in five months after having hit a 9-month high in February. Meanwhile, private sector business expectations about the coming 12 months improved for a sixth straight month, signaling the highest degree of optimism since February 2023.