The recovery in the eurozone manufacturing sector extended into its ninth consecutive month in March, rounding off a positive start to 2014. Although the final seasonally adjusted Markit Eurozone Manufacturing PMI® dipped to a three-month low of 53.0, from 53.2 in February, the average reading over the first quarter as a whole (53.4) was the best outcome since the second quarter of 2011.
March saw an evening out in the balance of the current upturn, as slowdowns in February’s top performers – Germany, the Netherlands and Austria – were largely offset by faster growth in Ireland (35-month high), Spain (47-month high) and Italy (2-month high) and a return to expansion in France that took its PMI to a 33-month peak. The Greek PMI edged back into contraction territory for the first time in three months. This mainly reflected sharp slowdowns in growth of output and new orders (in part by-products of weaker inflows of new export business) and another reduction in staff headcounts.
Eurozone manufacturing output, new orders and new export business all expanded for the ninth successive month in March. The rate of increase in output edged higher and, despite easing, growth of both new orders and new export business remained among the fastest during the past three years.
Germany saw solid growth of production and new business, despite rates of expansion for both cooling further from the 33-month peaks scaled in January. German manufacturers benefitted from a strong domestic market. New export orders also rose, but at the weakest pace since last October. The Netherlands also remained one of the stronger performers overall, although the growth rate of output eased to a five-month low.
France showed further signs of recovery, reflecting solid rebounds in new orders and new export business alongside an expansion of output for the second month in a row. Stronger growth of output, new orders and new export orders was also signalled in Spain and Ireland. Italy reported stronger trends for production and new export orders, but a weaker increase in total new orders.
Improved demand led to a further solid accumulation of backlogs of work at eurozone manufacturers, encouraging another slight increase in employment. Staffing levels have risen throughout the first quarter of the year.
Greece and the Netherlands were the only nations to report manufacturing job losses during the latest survey period. Ireland registered a solid increase in staffing levels, while jobs rose only marginally across the remaining nations surveyed.
On the price front, average input costs declined for the second month running in March, and at the fastest pace since July last year. Purchase prices fell in almost all of the nations covered, the sole exception being Ireland.
Strong competition led to a slight decrease in average output charges at euro area manufacturers during March, the first reduction since August 2013. Further price discounts were offered in Spain, Ireland and Greece, while charges fell in Germany, Italy, France and Austria following increases in February. The Netherlands was the only nation to register an increase in selling prices.
