Eurozone Manufacturing Accelerates As Economic Recovery Gains Steam

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On the latest edition of Market Week in Review, Chief Investment Strategist Erik Ristuben and Research Analyst Laura Bardewyck discussed recent economic data releases from the U.S. and Europe. They also unpacked U.S. Federal Reserve (the Fed) Chairman Jerome Powell’s recent comments on the economic recovery and discussed how competition for resources in Greenland is playing a role in China-U.S. tensions.

March PMI survey shows boom in eurozone manufacturing

Recently released data from March suggests that the economic recovery is gaining momentum across Europe, Ristuben said, noting that IHS Markit’s manufacturing PMI (purchasing managers’ index) for the eurozone reached a level of 62.5 last month. A number above 50 indicates expansionary conditions, and a number below 50 indicates contractionary conditions. “March’s reading of 62.5 means that the eurozone manufacturing sector grew at its fastest pace in nearly 24 years last month,” he remarked.

The PMI for the eurozone services sector, meanwhile, climbed to a level of 49.6 in March, teetering on the edge of expansion, Ristuben said. “The European services sector, while improving, is lagging behind the manufacturing sector, which doesn’t come as much of a surprise, given the difficulties Europe has experienced in its vaccine rollout and broader economic reopening,” he stated. However, the region’s vaccine campaign has picked up steam in recent weeks, Ristuben said, especially in countries like Germany, where nearly 700,000 doses were recently administered in a single day.

The economic recovery is also well underway in the U.S., he added, with IHS Markit’s services sector PMI for March rising to 60.4—the highest number in six years. “The expansion in services activity shows that the U.S. has fared better than much of Europe in its vaccination and reopening efforts—but the overall message here is that the economy is improving in both areas,” Ristuben remarked. While he expects some volatility within economies and markets in the months ahead, the latest numbers are a confirmation that things are getting better, he said.

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