The Eurozone and UK PMIs managed to improve slightly in March. but their economies remained in a weak position.
The composite indexes printed at 50.4 and 52.0 respectively.
That the eurozone’s 50.4 composite print is a seven-month high is a depressing stat, to say the least.
It was driven by a 26-month high (48.7) in manufacturing activity, though with tariff front-running distorting the figures, few investors will be getting excited about this being the beginning of a sustainable rebound.
All in all, today’s PMI report means next to nothing for the ECB. It is not nearly scary enough to shift the dial on an April cut, and it is not strong enough to spook anyone about inflation. Like every other central bank right now, it is all about the big changes ahead, and not the trailing performance of the economy. Markets need to see whether the German fiscal package can have a meaningful impact on growth and help to close the growth gap to the US.
The UK is a similar picture. The headline improvement to 52.0 is positive for the Chancellor ahead of her Spring Statement on Wednesday, but the slump in manufacturing – a better leading indicator – is cause for concern. The extra growth is concentrated in financial services rather than being spread across the economy, where the picture is still one of employment cuts, dampened confidence, and flatlining growth.
