The final data published by HCOB showed that activity in the eurozone private sector rose to a 10-month high in March, and moved into expansion territory, helped by a stabilization of demand and continued efforts to clear backlogs of work. Meanwhile, expectations for business activity have been at their most optimistic since February 2022 during March.
The Eurozone Composite PMI Output Index, which assesses the change in activity in the manufacturing sector and the service sector, rose in March to 50.3 points from 49.2 points in January. Economists had expected an increase to 49.9 points. However, March's upturn was only marginal overall as a sustained contract in manufacturing sector output almost canceled out the modest recovery in services activity (services PMI reached 51.5 compared to 50.2 in February and forecasts at 51.1)
The data also showed that demand in the private sector is still sluggish. That said, a stabilization of company order books ended a nine-month sequence of decline. Export sales fell again in March (for the 25th month in a row), but the rate of decline was the weakest in almost a year. Backlogs of work also fell in March, recording the weakest pace since May 2023. Meanwhile, the pace of job creation declined slightly from a seven-month high in February, but was broadly in line with the survey average. Supporting employment growth was a further uptick in business confidence. In fact, the outlook for business activity over the next 12 months was at its most optimistic since February 2022. The data also pointed to a weakening of inflationary pressures in March, as rates of increase in operating costs and selling charges fell. That said, price pressures remained stronger than seen on average prior to the pandemic.