The findings of the latest survey among European purchasing managers are as positive as they last were in spring 2011. An unusually sharp increase in orders, both in the service sector and industry, boosted production according to the survey results and also employment intentions in view of rising capacity utilisation. Price pressure on the purchasing side, resulting from the relatively weak euro, can be passed on to customers through higher prices.
Business expectations for the coming twelve months were also very optimistic, with an all-time high recorded in the March survey. It should be noted that the question about business expectations has only been included in the survey since 2012. In Germany and France, the big EMU member states, sentiment among purchasing managers was considerably brighter. In Germany, industry delivered the most significant boost whereas the service sector is setting the pace in France. The combined Composite Index Production for the Eurozone climbed from 56.0 to 56.7 index points – its highest level for 71 months. The sentiment barometers for both industry and the service sector were up.
German purchasing managers remained very confident in March this year. Following an increase of 1.5 index points to 58.3 index points, the sentiment barometer for industry also was at the highest level for 71 months. With regard to services providers, the index rose by 1.2 points. At 55.6 index points, it is still below the index level for industry. Driven by strong order books, production in the German private sector was further fuelled. As a result, employment intentions subsequently rose more sharply in March than at any other time in the last six years. Against this backdrop, it is unsurprising that the business outlook for the coming months was at an all-time high in both sectors of the economy.
The private sector in France also seems to be accelerating, based on the survey findings. Here, service providers reported excellent business conditions. The Purchasing Managers’ Index for firms in the service sector was up from 55.9 to 57.6 index points, climbing to the highest level in 70 months. Although sentiment was relatively positive in the industrial sector, it was nowhere near as high as in France’s service sector. The Composite Index, which reflects the combined sentiment in both sectors, rose from 55.9 to 57.6 points. This means that it is even higher than in Germany, where it stood at 57.0 points.
If the results of the purchasing managers’ survey published today are to be believed, the economic upswing in the European Monetary Union is continually accelerating. Respondents consistently assessed the situation as very good, and business prospects are estimated to be better than ever. Provided that both of these trends are confirmed, economic growth in the first quarter of 2017 is likely to have been strong. In that case, the growth rate compared with the dynamic growth recorded in the final quarter of 2016 of 0.4 per cent Q/Q may have accelerated further.