Early Eurozone services PMI shows expansion

24 March 2011

24 March 2011 | Angeline Albert

The services sector showed its strongest growth for three and a half years according to Markit’s latest flash PMI for the Eurozone.

The latest figure is 56.9 for March so far, which is up from its recording of 56.8 in February.

The result from Markit’s Flash Eurozone PMI for services is the highest since August 2007. It shows the industry is recovering well and closing the growth gap between it and manufacturing.   

In the business report on manufacturing, however, the results showed it continued to lead the recovery this month despite seeing output growth ease to a three-month low. The snapshot index was 58.9, a weaker performance than last month’s recording of 61.4.

The average rate of output expansion in France and Germany was the fastest in nearly five years, but growth outside of these countries was modest and weaker than last month. The two nations saw robust growth in new orders for services, manufacturing and exports.

However, the increase in new business in the rest of the region was centred on manufacturing – as opposed to the more domestic-facing services sector – and led by export demand.

National data showed employment in France and Germany rose at the fastest pace since July 2007. More job losses were, however, seen in the rest of the Eurozone.

March saw the steepest increase in average input costs since July 2008. Services sector costs increased the greatest. There were widespread reports of higher food, energy, fuel, metals and other commodity prices, as well as ongoing supply-chain disruption and shortages.

The flash PMI data was collected between 11–23 March and the overall results indicate the region continued to expand at a strong pace as we near the end of the first quarter of the year.

Chris Williamson, chief economist at Markit, said: “Manufacturing continued to lead the recovery in terms of output and jobs, in part reflecting an ongoing surge in export sales. However, the services sector is now closing the gap, recording the strongest growth of activity since mid-2007, suggesting a reawakening of the European consumer.”

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