LONDON, April 5 (Reuters) - The euro zone recovery
picked up pace last month but the upturn was uneven across
industries and countries, according to a survey which showed
price pressures remained elevated in the region.
S&P Global's Composite Purchasing Managers' Index (PMI),
seen as a good gauge of overall economic health, climbed to a
10-month high of 53.7 last month from 52.0 in February, shy of a
54.1 preliminary reading.
March was its third straight month above the 50 mark
separating growth from contraction.
"The euro zone economy continues to bounce back from the
lull we saw at the back-end of 2022 and the latest PMI survey
will add fresh conviction to the view that, at least for now,
the euro area is clear of a recession," said Joe Hayes, senior
economist at S&P Global.
"March's increase in economic activity mainly reflected
strong growth across the service sector. Better momentum here is
encouraging given the squeeze on household incomes from high
inflation and rising borrowing costs."
The PMI covering the bloc's dominant services industry
bounced to 55.0 from February's 52.7, albeit below the 55.6
flash estimate.
That stands in contrast to a manufacturing PMI published on
Monday which showed activity at factories fell further last
month as consumers, feeling the pinch from rising living costs,
cut back.
S&P Global said there was also a difference among member
countries with a considerable upward push to growth coming from
Spain and, to a lesser extent, Italy. But activity in Germany
and France rose only modestly, painting a more conservative
picture of underlying economic health.
Despite rising costs, demand for services was at a 10-month
high and the new business index rose to 54.2 from 52.2, in part
driven by an increase in export demand for the first time since
May last year.
Although the pace of increases in both input and output
costs waned, it remained high. The composite output prices index
fell to 58.1 from 60.8.
While that will likely be welcomed by policymakers at the
European Central Bank, who have so far failed to get inflation
anywhere near their 2% target, it does point to further interest
rate rises.
Having delivered an expected 50 basis point increase to
interest rates last month, a Reuters poll suggested the ECB
would follow through with 25 basis points lifts at its May, June
and July meetings.
"The case for further interest rate increases also remains
strong based off the survey's price gauges. Although inflation
rates have cooled from their peaks, they continue to run in hot
territory, particularly across the service sector," Hayes said.
(Reporting by Jonathan Cable; Editing by Hugh Lawson)
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