Euro zone private sector economic growth accelerated to a 10-month high in March, driven by a buoyant services sector, the S&P Global Flash Purchasing Managers’ Index (PMI) showed yesterday.
The index, calculated based on a survey of companies, was 54.1 points, compared to 52 points in February, marking the fifth consecutive month of growth. A number above 50 points indicates an increase in economic activity, while a number below this threshold indicates a decline. “The latest survey data shows a 0.3% increase in gross domestic product for the entire first quarter,” Chris Williamson, an economist at S&P Global, said in a statement.
He also added that “growth recovered from the lows seen at the end of 2022, since concerns about the state of the energy markets and the risks of recession have partially dissipated”, also highlighting the reduction of inflationary pressures and the improvement of the state of supply chains. However, Williamson warned that eurozone growth faces “significant imbalances” as it is based “almost exclusively on the performance of the services sector” while “the manufacturing sector is almost paralyzed and trying to maintain production levels in the country given the current reduction in demand”.
On the other hand, industrial activity moderated as a result of “a further reduction in the volume of new orders received by industrialists in the euro zone” and S&P Global noted that production levels depend only on “processing current orders”.
S&P Global noted that for the eurozone as a whole, “job growth accelerated in March and the 12-month outlook for activity remained positive despite trade concerns about banking sector difficulties and high borrowing costs. loans”.
interest is growing
And Francesca Palmas, of Capital Economics, said that these good numbers should lead the European Central Bank to “further increase its interest rates in the coming months”.
However, Bert Cullen of ING Bank expects “a slight slowdown in economic activity in the coming quarters” if problems in the banking system persist after the Silicon Valley bankruptcy and the Credit Suisse bailout.
According to him, “high inflation and tighter monetary policy will affect the economic outlook”.
Source: Al Ittihad
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