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Eurozone Private Sector Maintains Growth Momentum

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The eurozone economy maintained growth momentum in March with the easing of COVID-19 restrictions, final survey results from S&P Global showed on Tuesday.

The final composite output index posted 54.9 in March, a slight decline from 55.5 in February. The flash reading was 54.5.

The main impetus to the expansion was provided by the service sector, where growth edged slightly higher. Manufacturing production expanded in March, although the expansion was the weakest seen over the current 21-month sequence of increases.

The services Purchasing Managers’ Index rose slightly to 55.6 from 55.5 a month ago and was above the flash reading of 54.8.

Chris Williamson, chief business economist at S&P Global cautioned that the resilience of the economy will be tested in the coming months by headwinds which include a further spike in energy costs and other commodity prices due to Russia’s invasion of Ukraine, as well as worsening supply chain issues.

The survey showed that new orders increased at a solid rate in March, although new business from export markets deteriorated as the war in Ukraine reportedly impacted cross-border trade.

Employment levels continued to increase across the currency bloc. Moreover, the rate of jobs growth accelerated slightly to a four-month high.

Meanwhile, business confidence took a significant hit, slumping to a 17-month low as rising geopolitical tensions and inflation weighed on the outlook.

Amid surging energy, fuel and commodity prices, input cost inflation accelerated to a survey record high. To combat margin pressures, companies raised their charges to the quickest extent on record.

Among big-four economies, a faster expansion was recorded only in France. Business activity increased to softer extents in Germany, Spain and Italy.

France’s private sector expanded at the strongest pace since last July. The composite output index advanced to 56.3 in March, up from 55.5 in February and the flash score of 56.2.

The services PMI improved to 57.4 from 55.5 in the prior month. The flash score was 57.4.

Although Germany’s output growth remained firm in March, war in Ukraine and surging prices weighed on expectations. The final composite PMI dropped to 55.1 from 55.6 in February. The flash reading was 54.6.

The services PMI came in at 56.1, down from 55.8 in the prior month. The score remained above the flash 55.0.

Driven by the slowdown in both the manufacturing and service sectors during March, Spain’s composite output index dropped to 53.1 from 56.5 in February. The services PMI came in at 53.4 in March, down from 56.6 in the previous month.

The Italy composite output index posted 52.1 in March, down from 53.6 in February. Growth was broad-based at the sector level, although both goods producers and services firms registered slower rates of expansion. At 52.1, the services PMI was down from 52.8 in February.

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