Euro Zone Growth Slows to Nine-Month Low on Surging Costs

• The euro zone's private sector expansion weakened sharply in March as the Middle East war drove up energy costs and disrupted supply chains, with overall demand - ​a key gauge for economic health - falling for the first time in ‌eight months.
• The S&P Global euro zone Composite Purchasing Managers' Index fell to 50.7 in March from 51.9 in February but was slightly higher than a preliminary estimate of ​50.5. PMI readings above 50.0 indicate growth in activity.
• The encouraging signs of growth seen earlier in the year have been eradicated thanks ​to surging energy prices, choked supply chains, financial market volatility and a renewed downturn ​in demand, Williamson added.
• Services activity barely rose, with the business activity index sliding to 50.2 from ‌51.9 ⁠in February - its weakest reading in 10 months. Manufacturing output growth remained solid.
• Employment declined while business confidence dropped, raising concerns ​about future hiring and ​investment. Input cost inflation ⁠surged to its highest in slightly more than three years, with manufacturing seeing a record one-month jump. Firms raised prices charged to ​customers at the fastest pace since February 2024, though the ​increase was ⁠more modest than the spike in their own costs.
• Headline inflation in the bloc jumped above the European Central Bank’s 2% target last month, hitting 2.5% from 1.9% as soaring oil and ⁠gas prices ​intensified the dilemma between safeguarding growth and curbing ​inflation.

(Source: Reuters)