Eurozone economy rebounds amid rapid growth pace

Photo: EPA

The economic activity of the Еurozone has recovered at a faster than expected pace in March, Reuters reported. Official data showed that production orders spiked at its fastest speed for the last 23 years. The growth rate has offset the influence of on-going lockdowns in most European states affected the bloc’s leading service sector.

Still experts warn that April figures may be more subdued amid slow vaccine rollout in some regions and implementation of new restrictions for business due to the third wave of Covid-19.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, bounced above the 50 mark separating growth from contraction to 52.5 in March compared to February’s 48.8, its highest since late 2018.

Even the most optimistic respondent in a Reuters poll had said it would rise to 51.0 and the median predicted only a modest increase to 49.1.

“The outlook has deteriorated, however, amid rising COVID-19 infection rates and new lockdown measures,” Chris Williamson, chief business economist at IHS Markit told Reuters.

“The service sector remains the economy’s weak spot, but even here the rate of decline moderated in March as companies benefited from the manufacturing sector’s upturn, customers adapted to life during a pandemic and prospects remained relatively upbeat,” he added

A flash PMI covering the services industry rose to 48.8 from February’s 45.7, still in contractionary territory but its highest reading since August, and well above the median expectation in a Reuters poll for 46.0.

A big jump in input costs led services firms to increase their prices for the first time in just over a year. The output prices index climbed to 50.8 from 48.1. Any sign of increasing price pressures may be welcomed by the European Central Bank, which has struggled to get inflation anywhere near its target.

Meanwhile, booming demand for manufactured goods helped the flash factory PMI soar to 62.4 from 57.9, comfortably the highest reading since the survey began in June 1997 and well above all forecasts in a Reuters poll that predicted 57.7. An index measuring output, which feeds into the composite PMI, jumped to a survey high of 63.0 from 57.6. The manufacturing upturn was led by a record surge of factory production in Germany, accompanied by the fastest production growth since January 2018 in both France and the region as a whole, IHS Markit noted.

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