Euro zone factory activity shrinks faster in March

Euro zone factory activity shrinks faster in March

In March, factories in the euro zone demonstrated their worst performance for nearly six years, while forward-looking gauges pointed to downbeat times in the future, according to a poll, which is a dismal outcome for ECB policymakers.

As a matter of fact, IHS Markit's March final manufacturing Purchasing Managers' Index headed south for an eighth month, hitting 47.5 in contrast with February's reading of 49.3, which is below a flash forecast as well as its lowest outcome since April 2013.

An index gauging output change, feeding into a composite PMI due on Wednesday – considered to be a perfect indicator of economic health – headed south from 49.4 to 47.2 that appears to be its lowest value since April 2013 and also the second straight month it has slumped below the 50 mark, which divides contraction from surge.

The downbeat outcomes showed up after the ECB had its outlook changed in March. Apparently, it pushed back the timing of an interest rate lift until 2020 at the earliest and also told it would offer financial institutions another round of affordable loans to stimulate the euro zone economy.

In March, a Reuters survey discovered that the ECB might have missed its opportunity to have interest rates lifted before another downturn.

Friday's PMI guessed that downturn was actually underway. So, new orders headed south at their fastest tempo for more than six years, while factories decreased purchases of raw materials because they had unsold products stockpiled.

Upbeat mood as for the coming year weakened steeply. As for the future output index, it inched down from February's 56.7 to 55.5, which appears to be its lowest outcome since December 2012, so factories ramped up headcount in March.

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