Business activity in the European zone is seen to be almost back to the growth phase in March with readings exceeding expectations.
However, the recovery was uneven with a strong recovery in service activities which was seen to more than compensate for the worse decline in the manufacturing sector. At the same time there are similar differences between the two largest economies in the bloc, namely Germany and France.
HCOB's preliminary Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 49.9 this month from a reading of 49.2 in February. The reading beat expectations in a Reuters poll for 49.7 but the reading remained below the 50 level for the tenth time that separates growth from depreciation.
Germany's economic slowdown eased slightly in March as business activity in the service sector of Europe's largest economy held steady, according to preliminary data. is decreasing.
Meanwhile in Britain, outside the European Union, businesses continue to recover from the recession but firm price pressures could reinforce the Bank of England's wait-and-see approach to interest rates.
An index covering overall operating costs and prices charged in the European zone fell this month despite remaining high, with the latter falling to a four-month low. This is likely to be welcomed by policymakers at the European Central Bank who kept borrowing costs at record levels earlier this month while cautiously paving the way to lower them later this year. They are expected to start cutting rates in June, according to a Reuters poll.
Earlier on Thursday, the Swiss Central Bank cut its key interest rate by 25 basis points to 1.50%, a surprise move that made it the first major central bank to reduce its monetary policy stance.
The PMI covering the European bloc's dominant service industry jumped to a nine-month high of 51.1 from February's 50.2, well above the Reuters poll estimate of 50.5. Demand for the service rose for the first time since June.
On the other hand, the manufacturing PMI fell to a three-month low of 45.7 from 46.5, well below expectations that had predicted an increase to 47.0.
