Eurozone manufacturing PMI falls to eight-month low
Activity in the eurozone manufacturing sector fell to an eight-month low in March, according to data released on Tuesday.
IHS Markit's final purchasing managers' index for the bloc printed at 56.6, in line with the flash estimate and down from February's final reading of 58.6, with a slowdown across all nations and manufacturing sub-sectors.
Chris Williamson, chief business economist at IHS Markit, said: "March saw the biggest fall in the manufacturing PMI since June 2011 and the third successive slowing in the pace of expansion.
"We should not be too worried by the fall in the PMI as some moderation in the pace of growth from the surge seen at the turn of the year was inevitable, not least because short-term capacity constraints limit the economy’s ability to grow so quickly for long periods. This has been clearly evident in the recent lengthening of supply delivery times. Some of the slowdown has also been attributable to temporary factors such as bad weather."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the evidence is increasingly clear that manufacturing in the eurozone is now slowing following almost uninterrupted acceleration in the 12 months ending January.
"The headline was constrained by big declines in all the major EZ economies, which extended the bout of weakness in the February data. New orders and output rose at their slowest rates since November 2016, and export orders slid to a 15-month low.
"End-demand almost certainly is slowing, but manufacturers in the Netherlands and Germany also report that capacity constraints are to blame for the slowdown in production, primarily due to a sharp rise in suppliers’ delivery times. Some firms in the northern regions also noted that bad weather had disrupted activity."
Vistesen said these poor headlines notwithstanding, the trend of rising work backlogs and increasing employment continued last month, indicating that underlying conditions for growth remains robust.
"In addition, inflation pressures are also still on the rise, due to constraints on capacity and supply of raw materials."