New figures suggest Eurozone will DODGE the recession experts previously predicted

Current Eurozone/Shutterstock Images

Economic growth took place unexpectedly across the Eurozone so far this March as consumer confidence in services spending rose, but weakening demand for manufactured goods sharpened the downturn in the factory sector, according to surveys.

Friday’s figures add to evidence the bloc will dodge a recession and indicate the 20-country region’s economy will remain stable, in the near term at least, giving the European Central Bank (ECB) room to potentially continue tightening policy.

S&P Global’s flash Composite Purchasing Managers’ Index (PMI), viewed as a good gauge of the economy´s overall health, bounced to a 10-month high of 54.1 in March from February’s 52.0.

A PMI covering the Eurozone’s dominant services industry jumped in March to 55.6, up from 52.7—above all forecasts in the Reuters poll—which had predicted a small decline to 52.5.

Firms took on additional staff at the fastest pace since May last year to cope with the increase in activity. The employment index bounced to 54.3 from 51.9.

“The strong batch of euro zone flash PMIs for March means it is now all but certain that the economy expanded in Q1 while both employment conditions and price pressures remained very strong,” said Franziska Palmas at Capital Economics.

It was a different result in March for factories, however. The headline manufacturing PMI fell to 47.1 from February’s 48.5, against expectations seen in the Reuters poll for an uptick to 49.0.

S&P Global said the survey was consistent with GDP growth of 0.3% in the first quarter and accelerating to an equivalent rate of 0.5% in March alone.

Reuters poll earlier in March predicted a 0.1% contraction in gross domestic product (GDP) this quarter.

“The growth remains unbalanced, as manufacturing output and new orders fell, while services showed an unexpected uptick,” said Paolo Grignani at Oxford Economics.

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