Euro zone business activity returned to growth in March, PMI shows By Reuters

LONDON (Reuters) – Euro zone business activity expanded last month for the first time since May 2023 but the recovery was not matched by a stronger-than-expected rise in the bloc’s biggest firms that offset a sharp decline in manufacturing, a survey showed.

HCOB’s Purchasing Managers’ Index (PMI) for the financial sector, produced by S&P Global and seen as a good indicator of economic health, rose to 50.3 in March from 49.2 in February, an improvement on the previous estimate of 49.9.

The jump brought the index back above the 50 mark that separates growth and decline.

“Finally, good news again. The service sector in the euro area is recovering slowly, with stable employment in February and showing signs of moderate growth in March,” said Cyrus de la Rubia, an economist at Hamburg Commercial Bank.

The PMI jumped to 51.5 from 50.2, above estimates of 51.1 and its highest reading since June.

This comes after a sister survey released on Tuesday showed a decline in manufacturing output last month despite showing signs of recovery.

Job demand rose with the new business index to 51.4 from 49.8.

“It is very encouraging to note that the new business has resumed growth after eight dry months. This positive trend is expected to continue, encouraged by the growth of wages exceeding the drop in inflation, thus strengthening the purchasing power of families,” added de la Rubia.

As the service industry returns to profitability, overall optimism for the coming year has grown. The composite index for futures rose to 61.8 from 60.5, a level not seen in two years.

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