Eurozone private sector returns to growth in March

According to the report from IHS Markit, underpinned by a series record increase in manufacturing output, the eurozone private sector economy returned to growth during March. After accounting for seasonal effects, the Eurozone PMI Composite Output Index posted 53.2, up from 48.8 and the highest level since last July. The index was also above the earlier flash reading for March.

The second-fastest increase in private sector output in two-and-a-half years was driven in the main by a surge in manufacturing production, the strongest in nearly 24 years of data collection. In contrast, services output fell again, although only marginally and at the slowest rate in the current seven-month sequence of contraction.

The improved activity picture was broadly seen across the eurozone, with all nations experiencing a rise in their headline indices during March. 

Supporting the rise in overall eurozone private sector activity was an increase in new orders – again led in the main by the manufacturing economy. Overall, new sales rose at the sharpest degree in two-and-a half years. Moreover, demand increased across both domestic and external markets, with new export business rising at the strongest rate in over six-and-half years of data collection. Rising new business added to overall workloads, with firms reporting an increase in backlogs of unfinished business for the first time since November 2018. 

Finally, amid growing hopes that vaccination programmes will provide the basis for a strong rise in activity in the second half of 2021, business confidence improved to a 37-month peak.