Eurozone Activity Continues to Expand

The eurozone’s economic activity in the manufacturing and the services sectors, measured by IHS Markit showed that the activity expanded less than initially estimated. However, the overall activity was seen to be in a state of expansion in the first three consecutive months of the year.

Last week, IHS Markit’s data showed that the Eurozone’s composite Purchase Managers’ Index for the region, which is based on a survey of 5,000 companies, was seen at 56.4 in March, which was a modest increase of 0.4 points from February. It was also the highest level achieved in nearly 6-years, FXStreet reported.

A reading above 50.0 indicated an increase in activity in the Purchase Managers’ Index. Still, the final figure was a bit soft, as economists were expecting to see a print of 56.7 as anticipated based on the flash PMI readings. On the positive side, the data showed that the average measure for the first quarter was at the highest level since the first quarter of 2011. This was around the time when the eurozone economy was seen slowing down due to the sovereign debt crisis.

The first quarter composite data showed that it was consistent with the rise in the gross domestic product, which is expected to be at 0.6%, which is considered to be a slight improvement from the 0.4% GDP growth rate registered at the end of 2016, while also marking the strongest three month increase in GDP activity since two years.

Based on the surveys, it was evident that Germany continued to lead the way as the nation’s economy activity continues to accelerate. The average PMI for the quarter had indicated a 0.6% increase in economic activity, while the French PMI had also indicated a similar rate of growth. Interestingly, in the first quarter of the year, Italy’s PMI numbers also showed a pickup, long considered to be one of the laggards of economic growth in the region.

The sub-component data pointed to the optimistic picture that growth might be able to be sustained in the coming months. The new orders showed an increase at the fastest rate since April 2011. The new orders data reflected an increased level of confidence in the durability and recovery of the economy as businesses in the survey noted that additional hiring of workers increased at the fastest pace, last seen before the start of the global financial crisis.