The recovery is an ongoing process and it is becoming more balanced across countries. This is the main message coming out from the March PMI surveys. The Composite PMI for activity came in at 53.2, almost stable with respect to the previous month. For the whole quarter, the index rose to 53.2, more than one point above the Q4 average.
■ By country, Germany is clearly on an expansionary phase. Although the pace of increase slowed down in March, the level of the German composite activity index is markedly above the average of the other countries. Over the month, the French index jumped back into the expansionary territory (it was below the 50-mark since October 2013), recording the largest monthly increase since August 2011, thanks to a sharp rebound of activity in the more domestically oriented services sector. In the rest of the zone, output continued to grow at rates close to the February peak.
■ By sector, the recovery also seems more balanced. In both manufacturing and services sectors activity kept on increasing and forward-looking components indicate that output is likely to continue to grow going forwards. Despite the ongoing recovery, conditions in the labour market have not drastically changed yet. According to survey data, employment is just stabilising. The unemployment rate is likely to remain at record highs for a while.
■ To sum up, today’s data were rather encouraging. On a quarterly basis the eurozone Composite PMI for activity recorded the best performance since Q2 2011. After increasing by 0.3% q/q in Q4 2013, GDP growth might accelerate further. Yet, prices data still sound alarming. Despite the ongoing upturn in business activity, output prices kept on contracting, signaling that domestic demand is still weak and that inflation is still subject to downturn risks. The recovery of employment is everything but satisfactory. Actions form policy makers, essentially the ECB, would be clearly welcomed.
BY Clemente DE LUCIA
To Read the Entire Report Please Click on the pdf File Below