Private sector activity in the euro area returned to growth in March, for the first time in six months, thanks to a record rise in manufacturing output despite the pandemic, according to the first estimate Wednesday of the composite PMI index of the Markit firm.
This index rose to 52.5 points in March, after 48.8 in February.
A figure below 50 means that the activity contracts, while it progresses in reverse if the figure is above this threshold.
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The euro zone economy has done "better than expected" and this recovery "has been fueled by a record increase in manufacturing output as global demand continues to recover from the consequences of the pandemic," said Markit, in a statement.
The March figure represents "the first increase in private sector activity since September," it also signals "the strongest expansion since July and the second strongest recorded over the past 28 months," the cabinet noted.
Services are "still affected by the restrictions" related to the fight against Covid-19, but even in this sector "the decline has been the smallest since August", noted Markit.
However, the US Economic Information Society points out that general sentiment remains "tarnished by concerns about rising rates of infection with the virus."
"The PMI index published today surprised but confirms our forecasts of a further contraction of GDP in the first quarter", commented Bert Colijn, economist for the bank ING.
Germany accelerates faster than France
“As many large economies extend, or even strengthen, their restrictive measures, the rebound in economic output in the euro area will be further delayed.
We still aim for the second quarter as the starting point for the recovery, but we expect the pace of the GDP rebound to really pick up in the second half of the year, ”he added.
The March figures indicate a significant divergence between Germany, the euro zone's largest economy, which benefits more from the industrial rebound, and France, which is more dependent on services.
"The recovery observed in Germany (in March) is the strongest for three years and contrasts with a decline in France, for the seventh consecutive month", points the American cabinet.
"This two-tier economy is likely to persist for some time," predicts Chris Williamson, economist at Markit.
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“The surge in demand for manufactured goods is straining supply chains to an unprecedented level, driving costs up at the fastest pace in a decade.
This pressure on costs will probably have repercussions on inflation in the months to come, ”he warned.