Eurozone PMIs beat forecasts, hit 6-year high

Businesses across the eurozone were feeling even better than expected in March, according to a key series of surveys, which showed activity in the currency area hitting a fresh six-year high.

The overall purchasing managers’ index for the eurozone rose to 56.7, from 56 in February.

The increase in the composite figure reflected improvements in both manufacturing and services, which rose to 56.2 and 56.5 respectively.

Analysts had expected all three indices to slip back, but better than forecast results in France and Germany – the bloc’s two largest economies – helped drive the improvement.

Survey respondents also reported the best rate of employment growth in almost a decade. That news will be particularly welcome at the European Central Bank, which at its last monthly conference pointed to job creation as the clearest sign of the success of its stimulus policies.

The PMI surveys, compiled by IHS Markit, question firms on measures including orders, hiring and inventories to give a picture of the overall health of a sector. A headline number above 50 indicates expansion during the month, with the results seen as useful early indicators of economic growth.

IHS Markit said the preliminary figures for March imply a quarterly economic growth rate of 0.6 per cent.

Chris Williamson, IHS Markit chief business economist, said:

The eurozone economy’s throttle opened further in March, with business activity and hiring surging higher. The March flash PMI rounds off the best quarter for six years.

The acceleration in growth towards the end of the quarter, as well as improving trends in new business and an increased appetite to hire, suggest that strong growth momentum will be sustained into the second quarter.