Eurozone manufacturing sector expands at survey record rate in March

According to the report from IHS Markit, the eurozone’s manufacturing economy performed extremely strongly during March, with operating conditions improving to the greatest degree in nearly 24 years of data collection. 

After accounting for seasonal factors, the headline PMI surged to 62.5, up from February’s 57.9 and indicative of a considerable strengthening of sector performance. The index has now registered above the 50.0 nochange mark that separates growth from contraction for nine months in succession.

Once again, all three broad market groups recorded a month-on month strengthening of operating conditions. Growth rates were also higher in all instances, although gains were especially strong amongst investment and intermediate goods producers with series record highs seen in each case during March. 

Underpinning the headline Eurozone PMI were record rises in both output and new orders in March. A general strengthening in demand, on the back of increasing confidence about future economic conditions, helped to drive the record increases in production and output. Latest data showed that new export orders* rose for a ninth successive month and at a series record pace.

The further strengthening of trade, orders and production placed further strain on already stretched supply chains. According to the latest data, average lead times for the delivery of inputs lengthened at an unprecedented rate as challenges in sourcing inputs due to product shortages, stronger global demand and ongoing logistical challenges linked to COVID-19 continued in March. This all served to add to inflationary pressures. Input costs were reported to have risen in March to the greatest degree for a decade. 

Finally, confidence about output over the next 12 months held broadly steady on February’s record high. Of the nations covered by the survey, optimism was highest in the Netherlands and Ireland.