EU S&P Global Composite PMI Final (Mar) 50.7 vs. Exp. 50.5 (Prev. 51.9)
- "March’s PMI indicates that the eurozone economy has already been hit hard by the war in the Middle East. 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."
- "The near-stalling of growth in March drags the PMI’s signal for first quarter GDP growth down to 0.2%. More worrying is that there are clear risks of the economy contracting in the second quarter unless there is a swift resolution to the conflict."
- "Higher prices have also raised the prospect of interest rate hikes, with the European Central Bank taking a hawkish tilt to prevent these near-term inflationary pressures from becoming engrained."
Context
The final March PMI data of 50.7, beating expectations slightly, reflects a concerning trend, marking a notable decline from the previous month's figure of 51.9. This points to near-stalled growth and signals risks of contraction in the Eurozone economy unless geopolitical tensions ease swiftly. The implications for monetary policy are significant, as the European Central Bank may adopt a hawkish stance to combat rising inflation stemming from surging energy prices and supply chain issues.
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