Euro area manufacturing activity downturn eases further in March

By Mucahithan Avcioglu

ISTANBUL (AA) - The downturn in the eurozone's manufacturing sector softened in March for the third consecutive month, with manufacturing production posting growth for the first time in two years.

The Hamburg Commercial Bank (HCOB) flash eurozone manufacturing purchasing managers' index (PMI) rose to a 26-month high of 48.7 in March, from 47.6 in February, according to data released on Monday.

The PMI has stayed below the threshold level since July 2022, which above 50 points is interpreted as sectoral growth, while below this level is interpreted as contraction.

The manufacturing output index posted the largest growth in 10 months, while new orders index fell in March.

"New export orders also decreased. The pace of decline was unchanged from the previous month and the joint-weakest since May 2022," the report said.

Employment posted mostly no change in March despite further decreases in staffing levels of the two biggest economies of the eurozone, Germany and France.

Both input costs and output prices inflation eased in March.

"Just in time with the beginning of spring we may see the first green shoots in manufacturing. While we should not be carried away by a single data point, it is noteworthy that manufacturers expanded their output for the first time since March 2023," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

"Given the will of Europe, to invest heavily in defense and infrastructure – in Germany a corresponding historical fiscal package has been approved only last week – hope for a more sustained recovery seems well founded," he added.

The eurozone/euro area, or EA20, represents member states that use the bloc's single currency, the euro.