The commercial activity in the euro area grows at the fastest pace in 7 months

The commercial activity in the euro area grew at the fastest pace in 7 months in March, supported by the decline of the long slowing of the manufacturing sector, despite the slowdown in the growth of the service sector. The improvement of the climate of business in the euro area could obtain a greater momentum in the coming months, since it improves plans to increase spending in infrastructure and defense, in particular in Germany, it is optimistic on improving economic conditions in Europe.

The Euro Procurement Manager index, prepared by Standard & Poor Global, has risen to 50.4 this month, compared to 50.2 in February, its highest level since August. The index has remained above the level of 50, the separation between growth and contraction, since the beginning of this year.

However, the growth of the activity remained minimal and the index has reached less than the survey expectations conducted by Reuters with a height of 50.8. The index measures the dominant services sector in the euro area has decreased to 50.4 points from 50.6 points last month, which is less than the provision of the Reuters survey, which was 51.0 points.

However, the manufacturing sector, which lasted for almost 3 years, retired and the main purchase manager index has risen to its higher level in more than two years, recording 48.7 points, compared to the 47.6 points in February. The Reuters survey expected 48.2 points.

An index measures the production of factories, which nourishes the administration of the installed purchases, showed the first time in two years. He jumped to 50.7 points from 48.9 points, his highest level from May 2022.

“With the beginning of spring, we could attend the signs of prosperity in the manufacturing sector,” said Ciro de la Rubia, head of the Hamburg Commercial Bank. Although we should not be explained in the interpretation of any data point, it is worth noting that the producers have expanded their production for the first time since March 2023.

Faced with high costs, manufacturing companies have increased prices. The inputs and inflation of the exit have reached its highest level in seven months. However, prices growth in the service sector has slowed down. In an indication of the improvement of corporate morality, the rhythm of the generation of jobs is accelerated this month. The complex employment index has risen to 50.1 out of 49.2, exceeding the first tie in eight months.

In Germany, the commercial activity in the private sector has increased to the fastest pace in ten months in March, led by the first increase in production production in almost two years. The German planned buying purchase index, which is prepared by Standard & Poor Global, has reached 50.9 in March, compared to 50.4 in February, which is its highest level since May last year, exceeding the 50 threshold that separates growth and contraction. Analysts whose Reuters had signed a reading of 51.0.

“It seems that economic growth in the first quarter is promising, since the index of purchases managers remains above the expansion threshold for the second consecutive month.”

He added that Germany, which last week agreed to increase expenses with the aim of stimulating growth in the largest economy in Europe and improve military expenses, can attend the beginning of a more sustainable economic recovery thanks to the new financial package, according to the declarations of De La Rubia.

While the industrial sector is still in the narrowing area, the index of the manufacturing sector has improved from 46.5 to 48.3, circumventing the expectations that indicated its rise to 47, thanks to the strength of the demand, which prompted the producers to increase production for the first time in about two years, according to the economist.

On the other hand, the service sector has witnessed a drop in the momentum, since the activity index has decreased from 51.1 to 50.2, which is less than the expectations 51.6, but which is still within the growth area.

The investigation also showed the drop in inflationary pressures, since the costs of inputs and production prices have increased in the slower frequency since last October.

In France, the activity of the private sector for the seventh month has reduced to March, with the trust of the companies falling in the second largest economy of the eurozone at its lowest level since April 2020.

The initial purchases of the French services sector, prepared by Standard & Poor’s Global, reached 46.6 points in March, an increase compared to the 45.3 points in February, exceeding the expectations of the Reuters survey which were 46.3 points. However, the reading remained below the level of 50 points, indicating the continuous contraction of the activity.

As for the manufacturing sector, the index of the contract manager increased in March to 48.9 points, compared to the 45.8 points in February, circumventing Reuters’ expectations which were 46.5 points. The index of buying managers for March, which includes the services and production sectors, has also risen to 47 points from 45.1 points in February, but this still indicates a continuous contraction in the activity for the seventh consecutive month.

“Standard & Poor’s Global” has indicated that French companies expect activity levels to decrease in the next twelve months, since business morality has decreased at the weakest levels in about five years.

“The French economy has to face difficulties in resuming its momentum. Although the index of the French purchasing manager issued by HSOB has improved in March compared to the previous month, it is still in the reprimand area. He added:” France has approved the budget law postponed to February, which has helped to avoid reducing its credit rating, but there is still a high degree of uncertainty about the future economic policy “.