Business activity in the eurozone ticked up slightly in March, with the composite PMI climbing to 50.4 from February’s 50.2 the highest level in seven months. This modest improvement comes amid ongoing economic challenges and mixed performance across sectors.
A significant factor in the uptick was the rebound in manufacturing. German factories recorded their strongest expansion in 10 months, with a key output index jumping to 50.7 from 48.9, marking the first increase in production in nearly two years. However, while manufacturing showed signs of recovery, the services sector, which forms the backbone of the eurozone economy, continued to grow at a slower pace; its index dipped slightly to 50.4, just below market expectations.
Analysts noted that the improvements in manufacturing and a gradual rise in employment evidenced by an increase in the composite employment index offer cautious optimism for the near term. Yet, overall growth remains fragile due to global trade uncertainties and persistent headwinds, including potential impacts from trade tensions and geopolitical risks.
The mixed economic data suggest that while domestic investments in infrastructure and defense, particularly in countries like Germany, may provide a boost, the broader recovery could be tempered by sluggish demand in the services sector and ongoing external pressures.
