Private sector activity in the euro zone in the month of March 2024 has reached its highest levels in the last nine months, as reflected in the advance data from the S&P Global composite PMI. Its reading of 49.9 points, compared to 49.2 in February, suggests a stabilization of the euro block economy.
This gradual economic stabilization in the region basically responds to the improvement in activity observed in March in the services sector, whose preliminary PMI has risen to 51.1 points from 50.2 last month, its best reading in nine months, while that the manufacturing PMI worsened to 45.7 from 46.5 points in February, at three-month lows.
“For those who expected a recovery in the manufacturing sector in the first quarter, the time has come to give up,” commented Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, in reference to the difficulties that Germany is going through, although points to “a ray of hope” as companies remain optimistic about future production.
Keys to the service sector
Regarding the services sector, the expert affirms that “these are times when we must be humble” so a modest monthly expansion is already good news, after the services PMI has entered further into growth territory with its preliminary reading of 51.1 points, which represents the second consecutive month of expansion.
Furthermore, it suggests that the European Central Bank may find some solace in the fact that price pressures in the wage-sensitive services sector have not increased again, while the rise in input costs has eased. and the same has happened with sales prices, although price pressures remain high.
“Therefore, the new PMI price index is not enough to change the ECB’s apparent plan to cut interest rates in June and not in April,” he underlines.
