Despite a context marked by the possibility of an escalation in the commercial war with the United States following the tariff policy prevailing in the Trump administration, the Eurozone companies are more optimistic After the stagnation of GDP experienced in the late 2024, which put on the table an aggravation of the economic weakness of the euro zone. This is read in the last report on PMI manufacturing published by S&P Global, which concludes that the Business activity in the Eurozone has grown in January for the third consecutive month. But what exactly measures this indicator?
The PMI or Global Purchasing Manager Index is a study based on a survey of entrepreneurs that provides monthly, updated and precise indicators of economic trends that will predominate in an economy, anticipating official data. To understand the figures that the study reflects, it must be taken into account that a number of less than 50 indicates a contraction of the activity of the private sector, while an index above that threshold indicates an expansion.
Exactly, during the month of March there has been a slight expansion in the activity of the private sector of the eurozone, when registering an increase in 0.2 points production, going from the 50.2 reached in February at March 50.4. This light climb, although mild, is the fastest since August of last year. Also, and as read in the Global S&P report, the general improvement of production responds both to the Growth of the Services Sectoralthough it has been moderate, like that of the manufacturewhich stands out for changing the trend by joining the rhythm of expansion of the previous one.
Thus, manufacturing production grew, showing “the first green shoots,” as the Dr. Cyrus de la blondeChief economist of the Hamburg Commercial Bank. In this sense, the PMI index of Manufacturing production of the Eurozone He registered for the first time in two years an increase above the 50 -point threshold, which separates the expansion of the contraction, and the largest since May 2022, from the 48.9 points of February to the Current 50.7. In this sense, although the improvement in the manufacturing sector can respond to the temporal boom of trade with the US in the forecast of tariffs, De la blonde emphasizes that Europe’s will to invest in defense and infrastructure reinforces the hope of a sustained recovery.
On the other hand, and despite registering the lowest expansion pace in four months, service providers remain above the threshold, placing itself at 50.4 points compared to the February 50.6, which is an increase in activity for the fourth consecutive month.
The decrease in new orders did not stop the general increase in production
While the activity increased for the third consecutive month, companies continued to experience a decrease in new orders in the first quarter of the year. These fell both in manufacturing and services, although “the fall in the first was the least pronounced in the current contraction sequence that covers almost three years,” says the Global S&P study.
With this descent, they are already going ten consecutive months in which the Eurozone registers a decrease in new orders, maintaining in March a rhythm of reduction practically unchanged since February and, together, the weakest since May 2022. Likewise, the new export orders also decreased.
Employment managed to stabilize in March
Production growth caused Eurozone companies to put end to a period of loss of jobs which went back to August 2024. Despite this, in general terms the template levels were practically unchanged in March, producing a faster increase in employment in the services sector and a softer reduction in the workforce in the manufacturing sector. All this, despite the new falls of the workforce in the two largest economies in the Eurozone, Germany and France.
Both the costs of the inputs and the collected prices increased at a slower pace, says S&P
As for prices, both the costs of inputs and production charges increased at a slower pace. Of the blonde pointed out that “The increases (…) are still moderate thanks to the decrease in energy costs”.
The inflation rate of the costs of the inputs was softened in March, being the weakest since November of the previous year and ending a five -month run in which the rhythm of increase had accelerated, which “indicates a lower salary pressure«, Adds from the blonde. Precisely, the latter is one of the key components of the costs of inputs in the services sector.
On the other hand, the costs of manufacturing inputs increased at a relatively moderate pace. However, «the ECB continues to keep in the spotlight numerous risksas possible retaliation tariffs by the United States, measures to limit the import of products from China and the increase in food prices caused by extreme weather conditions, “says the expert. Therefore, the sum of these factors to the general uncertainty »make some ECB members doubt the types too drastic.”
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