Business activity in the eurozone stabilised in March thanks largely to a “modest recovery” in the service sector, a closely watched survey showed Thursday.
The HCOB Flash eurozone purchasing managers’ index (PMI) published by S&P Global stood at 49.9 in March, up from 49.2 in February, itself revised up from an initial reading of 48.9.
A figure below 50 indicates contraction. The latest reading — though right on that threshold — was the highest registered in nine months.
“Business activity in the euro area came close to stabilising in March” with “only a marginal decline in output of goods and services”, the survey said.
It noted however that continuing output declines in the eurozone’s two biggest economies, Germany and France, were preventing the index from registering an expansion.
Overall activity in the service sector rose for the second month, posting the biggest increase since June 2023.
Manufacturing output, however, fell for the 12th successive month, though the decline was becoming less steep.
The indicator will feed into calculations on European Central Bank interest rates and the prospect for a rates cut as inflation risks recede in the European Union.
ECB chief Christine Lagarde warned Wednesday of the risk of acting “too late” on cutting rates, firming up the likelihood of a reduction in June when the bank unveils its latest growth and inflation projections.
The ECB has kept its interest rates steady since October, following an unprecedented series of increases to tame what was red-hot inflation.
“Survey details show that the growth rate of employment and price pressures are easing,” said Clemente De Lucia, senior European economist at Deutsche Bank.
