Slowdown in Eurozone manufacturing growth continues in March

European Open Preview: Equities soften as China retaliates; US ISM manufacturing PMI pending

GBP/USD – Pound Higher, US ISM Manufacturing Dips

The Markit/CIPS UK Manufacturing purchasing managers' index (PMI) showed a reading of 55.1 last month, slightly higher than the 55.0 in February.

The PMI's new business index hit a nine-month low in March, marked by a tailing off in growth in export orders - possibly reflecting sterling's recent rally.

According to IHS Markit, which conducted the survey of 450 industrial companies, the reading was broadly in line with the long-run series average of 49.4 since July 2012. Of the 18 manufacturing industries, 17 reported growth in March.

China's Caixin PMI fell to 51 last month, down from 51.6 in February - its weakest reading since November past year. At 4.00 am ET, final Eurozone manufacturing PMI is due. "The growth momentum of the Chinese manufacturing economy may have weakened in March, but at a marginal pace".

"We should not be too anxious by the fall in the PMI as some moderation in the pace of growth from the surge seen at the turn of the year was inevitable", said Chris Williamson, chief business economist at survey compiler IHS Markit. Although the recent United Kingdom manufacturing PMI reading printed better-than-expected, additional activity measures out on 4th and 5th April could end up dragging the GBP/EUR exchange rate down.

Indian goods manufacturers raised their output for the eighth successive month during March.


The further easing in the headline PMI mainly reflected slower growth of manufacturing production and incoming new business, both of which rose to the lowest extents since November 2016.

March saw a further increase in input costs.

"Without a significant rise in new orders, and if supply chains are still disrupted by shortages or the weather, for the next few months it's anticipated that there will be a continued muted pace of growth".

Mexico's PMI for March was 52.4, up from 51.6 in February. Still, charges rose at only a modest pace, to suggest that manufacturers' margins remained under pressure.

Production levels continued to grow in March, although the rate of increase was the slowest in five months.

"Amid a slower expected pace of recovery in consumer spending, IHS Markit marginally downgraded its real GDP forecast to 7.3 percent for fiscal year 2017/2018", Dodhia said.

Latest News