The economy grows in March in the Eurozone. And the pace is still strong. However, "growth expectations have worsened at the same time that inflation forecasts are more critical". This was stated by the analysts of S&P Global who have released the PMI services and composite indices (formerly IHS Markit) in the euro area and in Europe.
“There is no certainty of a recession, since the degree of difficulty that the economy will be able to endure in the coming months will depend on the duration of the war and the possible changes in fiscal and monetary policies. However – he commented Chris Williamson, Chief Business Economist at S&P Global, analyzing the final Eurozone Composite PMI data – will most likely be difficult to sustain the strong expansion in March and, on the second quarter economy, clearly hangs a greater risk of stagnation or contraction".
The PMI indices for March for the Eurozone and Europe
In the Eurozone, the services PMI index rises to 55,6 in March, while the composite falls to 54,9. In the European Union, the March index is equal to 55,6 points, an increase compared to the previous 55,5 points (the forecast was 54,8 points). Below are the indices of the main countries:
- Germany: PMI services index indicated a robust recovery, registering 56,1, up from 55,8 in February and at its highest since last September. Instead the composite index fell to 55,1.
- Italy: PMI services index falls to 52,1 in March from 52,8, composite to 52,1.
- France: sharp acceleration of the S&P Global PMI services index, which rose to 57,4 from 55,5 in February, clearly recovering from the January trend. A growth that also pushed the Composite up in March to 56,3 from 55,5 in February.
On the one hand, therefore, expectations on economic growth benefited from the easing of the Covid restrictions, on the other, however, the jump in inflation and the tensions arising from Russia's war in Ukraine are changing the general picture.
“The increasingly reduced anti-Covid-19 restrictions – explains the Markit press release – have made it possible to satisfy the growing levels of activity, the Eurozone economy maintained a strong growth rate in March, slowing only marginally from the five-month high reported in February.
The main push to the expansion - explains the note from S&P global - was provided by the tertiary sector, where growth was slightly higher while manufacturing production recorded a weaker rate of increase. The strong increase was also recorded for new orders, although foreign orders in March decreased due to the war in Ukraine which, as can be seen from the data collected, affected cross-border trade.
War arrives, confidence in the future collapses
La confidence meanwhile it took a beating, falling to a 17-month low since growing geopolitical tensions and inflation weighed on future forecasts. With soaring energy, fuel and commodity prices, input price inflation in March accelerated to a record high. To stem margin pressures, March selling prices of goods and services indicated their fastest-ever rise.
The seasonally adjusted S&P Global PMI Eurozone Composite Output in March it stood at 54,9, slightly down on the 55,5 in February but still indicative of strong growth in eurozone activity. The expansion was led by services, where activity increased marginally faster than in February. Also there manufacturing production has increased on a monthly basis, but has been the weakest in the last 21 months of growth sequence.
Composite and tertiary PMI index in detail
Among eurozone nations tracked in March, Ireland recorded the fastest growth, indicating the fastest expansion in five months. Also there France it indicated a larger increase, ranking second in its QXNUMX-end national growth chart. For other countries, that is Germany, Spain and Italy, activity indicated more moderate growth rates than in February.
The S&P Global PMI Eurozone Services Index in March it rose slightly to 55,6, from 55,5 in February, showing strongly expanding tertiary activity at the end of the first quarter. Overall, the growth rate was the fastest in four months.
“The gradual reopening of the Eurozone economy, due to the easing of the Omicron wave, provided a welcome boost to activity in March, promoting a new strong expansion that left behind the slowdown earlier in the year. However, the resilience of the economy will be tested by obstacles in the coming months which include new surges in energy costs and raw material prices due to Russia's invasion of Ukraine, but also by the worsening of the supply chain caused by the war and the sharp deterioration of optimism about the prospects for the coming year” – he declared Chris Williamson, Chief Business Economist at S&P Global, analyzing final Eurozone Composite PMI data.
