Economic Buzz: Eurozone growth slows to nine-month low as demand weakens and costs rise
The Eurozone Composite PMI Output Index fell to 50.7 in March from 51.9 in February, remaining just above the 50 mark that signals growth but below the long-term average of 52.4. The slowdown was mainly driven by the services sector, where activity growth was marginal, while manufacturing output remained relatively strong.
Demand conditions weakened for the first time since last July, with total new orders declining. This was largely due to a fall in services demand, while manufacturing export volumes were broadly stable. New export orders across the region also declined, with services seeing the sharpest drop in international demand in six months.
Among major economies, Spain recorded the fastest growth, followed by Ireland despite slower expansion. Germany continued to grow but at a weaker pace, while France and Italy saw contractions.
Cost pressures increased sharply during the month, with input price inflation rising to its highest level since February 2023. Manufacturing recorded a particularly steep rise, with input costs seeing a record monthly increase. Services also saw higher expenses. However, companies were only able to pass on a limited portion of these costs, with selling prices rising modestly, though at the fastest pace since February 2024.
The Eurozone Services PMI Business Activity Index fell to 50.2 from 51.9, marking the weakest performance since May last year. Services demand declined for the first time since July 2025, while backlogs continued to fall.
Employment across the private sector declined slightly, with the sharpest drop in over a year, mainly due to manufacturing job losses. Business confidence also weakened, falling to a near one-year low amid ongoing economic uncertainty.
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