Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said: “The eurozone’s economic recovery gained further momentum in March, with the PMI hitting its highest for almost four years. The improvement provides welcome news to a region awaiting signs that the ECB’s quantitative easing is stimulating the real economy. “The region’s GDP looks to have expanded by 0.3% in the first quarter, buoyed by a 0.4% expansion in Germany and signs of a long-awaited recovery in France. Although the surveys are signalling a mere 0.2% expansion of the French economy in the first quarter, the euro area’s second-largest economy is seeing its best performance since 2011. “Business conditions are also picking up in the rest of the region, where growth of new orders and employment both hit the highest since 2007.
“Service sector growth again outpaced that seen in manufacturing across the region as a whole, but both sectors saw improved rates of expansion. While service providers and manufacturers have been helped by consumers enjoying low prices, manufacturing has also been boosted by exporters benefitting from the weaker euro. “Deflationary pressures also eased during the month, linked to higher wages and rising import costs resulting from the euro’s depreciation.
“The survey data therefore indicate that the ECB’s quantitative easing has been started at a time when the eurozone’s economic upturn is already starting to gain traction. This augurs well for the region to enjoy further improvements in business conditions as the year proceeds, helping drive greater business investment and hiring, and thereby ensuring that the recovery becomes sustainable. Worries persist, however, in relation to Greece and Russia, which are a reminder that ongoing recovery is by no means assured.”
