Eurozone Private Sector Growth Hits 9-Month Low

(RTTNews) - The euro area private sector logged its softest expansion in nine months in March amid a renewed fall in new orders and intensifying cost pressures, final survey data from S&P Global showed Tuesday.

The final composite output index posted 50.7 in March, down from 51.9 in February. This was the lowest reading since last July and above the flash estimate of 50.5.

The service sector was the source of the slower expansion in March. The services Purchasing Managers' Index declined to 50.2 from 51.9 in February. This marked the weakest expansion since May last year. The flash reading was 50.1.

"The encouraging signs of growth seen earlier in the year have been eradicated thanks to surging energy prices, choked supply chains, financial market volatility and a renewed downturn in demand," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "The accompanying surge in prices raises the unwelcome spectre of stagflation, or worse, in the near-term," Williamson added.

New business intakes declined in March after a sustained period of improving demand. New export orders deteriorated but a mild pace. There was a further decline in backlogs of work.

Private sector employment was reduced slightly in March, following two months of broadly no change.

Further, business optimism dropped for the first time since last December, with the level of positive sentiment at its lowest in almost a year.

Regarding prices, the survey showed that input cost inflation accelerated sharply to its highest in just over three years. In turn, output prices registered the strongest increase since February 2024.

At the national level, economic activity trends were mixed. Spain was the fastest-growing country in March, registering an accelerated upturn. Germany continued to register growth, albeit with its rate of increase slowing to the weakest in the year-to-date. Meanwhile, France and Italy recorded contractions.

Germany's private sector growth weakened to a three-month low in March. The composite output index slid to 51.9 in March, in line with flash estimate, from 53.2 in February. The slowdown owed entirely to the service sector, with manufacturing output growth at a 49-month high. The services PMI fell to 50.9 from 53.5 in the prior month. The flash score was 51.2.

Meanwhile, the downturn in the French private sector deepened in March. The composite output index fell to 48.8 from 49.9 in February. The reading was above the initial estimate of 48.3.

The services PMI dropped to 48.8 in March from 49.6 in the previous month. The initial score was 48.3.

Italy's private sector logged its first contraction since start of 2025. Down from 52.1 in February, the composite output index dropped into contraction, posting at 49.2 in March.

The decline was led by a renewed fall in services activity, while manufacturing output posted a softer expansion. The services PMI slid to 48.8 from 52.3 in the prior month.

On the other hand, Spain's private sector expanded at a stronger pace in March. The composite output index registered 52.4, up from 51.5 in the previous month. The services PMI improved to 53.3 from 51.9 in February.