Eurozone composite PMI revised to 10-month high on services strength

Economic activity in the eurozone's private sector expanded for the first time in ten months in March, according to revised figures released by Hamburg Commercial Bank (HCOB) on Thursday.

The second estimate of the closely watched eurozone composite purchasing managers' index (PMI), which measures conditions across both the manufacturing and services sectors, was lifted to 50.3 for last month, up from the initial reading of 49.9 and ahead of the February level of 49.2.

Indicated by any level over 50.0, this was the first month showing an increase in economic activity since May 2023.

The improvement was on the back of continuing strength in the services sector, with the services PMI rising to 51.5 from 50.2, making up for ongoing weakness in manufacturing, where the PMI fell to 46.1 from 46.5.

HCOB said that growth was helped by a stabilisation of demand and "continued efforts to clear backlogs of work",along with a third straight month of net employment gains in the region. Meanwhile, expectations for business activity were at their most optimistic since February 2022, with inflationary pressures continuing to ease.

HCOB released a whole host of services PMIs from across the continent on Thursday, with surveys from powerhouses Italy, France and Germany all beating expectations for March – though Germany was the only one to see an expansion in activity last month.

HCOB's chief economist Cyrus de la Rubia said the eurozone services sector was "gradually finding its footing" after stabilising in February. “Finally some good news again," he said.

"It's particularly encouraging to note that new business has resumed growth after an eight-month dry spell. This favourable trend is expected to persist, fuelled by wage growth outpacing inflation, thus bolstering the purchasing power of households. Consequently, individuals are more inclined to dine out, travel, and spend their money on other services.

"However, a full-fledged boom is not on the horizon," he added.