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Eurozone Private Sector Growth Slows On Russia-Ukraine War

Eurozone private sector growth eased in March as the economic impact of Russia’s invasion of Ukraine offset a boost to demand from the further reopening of the economy from COVID-19 restrictions, flash survey results from S&P Global showed on Thursday.

The flash composite output index dropped to 54.5 in March from 55.5 in February. The score was forecast to fall deeply to 53.9.

The survey data underscore how the Russia-Ukraine war is having an immediate and material impact on the eurozone economy, and highlights the risk of the eurozone falling into decline in the second quarter, Chris Williamson, chief business economist at S&P Global, said.

The services Purchasing Managers’ Index came in at 54.8, down from 55.5 a month ago. The reading was above the economists’ forecast of 54.2.

At the same time, the manufacturing PMI declined to a 14-month low of 57.0 from 58.2 in the previous month. The expected reading was 56.0.

The survey showed that firms’ costs and average prices charged for goods and services rose at unprecedented rates as commodity prices surged higher and supply chain delays hit the highest since last November.

Meanwhile, falling exports led to a renewed cooling of demand and business confidence sank to the lowest for nearly one-and-a-half years as companies grew increasingly concerned about the outlook.

By country, France bucked the slowdown trend with business activity rising at the fastest pace since last July. The flash composite output index unexpectedly rose to an eight-month high of 56.2 in March from 55.5 in February. The score was forecast to fall to 54.3.

The improved picture at the composite level failed to highlight the wide sectoral differences. Services output grew at the fastest pace in four months. Meanwhile, manufacturing production growth slowed notably due to ongoing supply chain problems and the war in Ukraine.

The services PMI climbed to 57.4 from 55.5 a month ago. The expected score was 55.0.
On the other hand, the manufacturing PMI declined to a five-month low of 54.8 from 57.2 in February. The reading was also below the economists’ forecast of 55.0.

Germany’s private sector growth eased in March due to the combination of rising prices, material shortages, geopolitical uncertainty and COVID-related absences.

The flash composite output index dropped to 54.6 in March from 55.6 in February but was above the expected score of 53.7.

The services PMI came in at 55.0, down from 55.8 in the previous month. However, the score was above the economists’ forecast of 53.8. Likewise, the manufacturing PMI fell to 57.6 in March from 58.4 a month ago. The expected reading was 55.8.

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