Eurozone PMI at eight-month low amid broad-based growth slowdown
Staff Writer |
Eurozone manufacturing operating conditions improved to the least marked extent in eight months during March, as the sector continued its post turn of the year slowdown.
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Rates of expansion eased across all of the nations covered by the latest PMI surveys and across the consumer, intermediate and investment goods industries.
The final IHS Markit Eurozone Manufacturing PMI posted 56.6 in March, unchanged from the earlier flash estimate and down further from December’s series-record high.
The latest reading and the average over the first quarter as a whole (58.2) both remained indicative of solid growth nonetheless.
The Netherlands, Germany and Austria were the strongest performers overall.
All of the other nations covered by the survey also saw solid rates of growth in March.
The weakest increases were signalled in France and Ireland.
The further easing in the headline PMI mainly reflected slower growth of manufacturing production and incoming new business, both of which rose to the lowest extents since November 2016.
Growth in new export business* (which is not a component of the headline PMI) slipped to a 15-month low.
The breadth of the upturns in output, new orders and new export business was as wide as their slowdowns during March, as all of the countries covered recorded sustained growth in each, albeit at slower rates than in recent months.
In some Northern nations, this was partly driven by bad weather.
There were also signs that capacity constraints deriving from the recent growth spurt were impacting on production growth in March.
Recent lengthening in suppliers’ delivery times has been among the greatest in the survey history, leading to widespread reports of raw material shortages and supply delays.
This trend was especially noticeable in the Netherlands and Germany, both of which saw record lengthening in vendor lead times.
Backlogs of work at euro area manufacturers also increased during March, taking the current sequence of expansion to almost three years.
Companies reacted to the sustained pressure on their capacity by raising employment.
Jobs growth was signalled for the forty-third straight month, although the pace of increase eased to a seven-month low.
Job creation was recorded in all of the nations covered by the survey in March, with the steepest rises seen in the Netherlands, Austria and Germany.
However, in line with the trend in production, rates of expansion eased across all countries.
Input price inflation remained marked in March, despite easing to a six-month low.
Higher costs were driven, at least in part, by supply-chain constraints.
Average selling prices also continued to rise at a solid clip, albeit the slowest in the year so far, as companies passed on the rise in purchasing costs.
There were also reports that the ongoing upturn in demand was leading to improved pricing power.
Sentiment among euro area manufacturers regarding future output softened in March to a 15- month low, but remained strongly positive overall.
Only Greece signalled an improvement in optimism during the latest survey month. ■