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Finance

Euro zone economy saw only modest growth in March, PMI shows

Published by Global Banking and Finance Review

Posted on April 3, 2025

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LONDON (Reuters) - The euro zone economy eked out modest growth for a third month in March as the bloc's manufacturing industry showed signs of recovery and its dominant services industry expanded at a slightly faster pace than in February, a survey showed.

But those recovery signs could have been due to frontloading by factories wanting to get goods to customers before a new round of U.S. tariffs take effect.

HCOB's final composite Purchasing Managers' Index for the bloc, compiled by S&P Global and seen as a good guide to overall economic health, rose to 50.9 from 50.2.

That was ahead of a preliminary estimate for 50.4 but below its long-run average and not far above the 50 mark separating contraction from growth.

"At the end of last year, it looked like the euro zone was heading into a recession, but things have somewhat stabilized at the start of this year," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

"However, U.S. tariffs could quickly throw the euro zone's economy off course again."

Some of that modest growth was down to firms running down unfulfilled orders. The composite backlogs of work index fell to a three-month low of 47.1 from 47.3.

A PMI covering the services industry nudged up to 51.0 from 50.6. The flash estimate had put it at 50.4.

Services inflation - closely watched by the European Central Bank - eased last month. Both the input and output prices indexes eased with the latter falling to 53.6 from 54.7.

Having cut its deposit rate for a sixth time last month the ECB is expected to trim another 25 basis points on April 17, taking it to 2.25%, a Reuters poll found.

(Reporting by Jonathan Cable; Editing by Hugh Lawson)