Euro Zone's Tepid Business Growth Shows Signs of Recovery Amid Manufacturing and Infrastructure Boost

Business growth in the Euro zone remained weak in March but showed signs of recovery, bolstered by easing manufacturing downturns and potential infrastructure investments. Germany experienced significant growth, contrasting with France's continued contraction. Meanwhile, Britain's PMI rose, offering some relief amidst broader economic challenges.

The Euro zone's business growth, while still sluggish, showed the fastest expansion in seven months this March. This uptick was partly due to a decline in the manufacturing sector's prolonged downturn, although slower growth in services continued to pose challenges. Analysts suggest that upcoming infrastructure and defense investments, especially in Germany, could further fuel economic optimism.

The HCOB preliminary composite Purchasing Managers' Index, compiled by S&P Global, increased to 50.4, indicating mild growth. Since the year's start, this index has stayed above 50, signaling expansion, albeit below the 50.8 predicted by a Reuters poll. Despite a dip in France's business activity, Germany's economy recorded its most substantial growth in ten months, driven by its manufacturing recovery.

Britain, despite being outside the EU, saw its composite PMI reach a six-month high as robust services growth offset the enduring manufacturing contraction. This offers some reassurance to finance minister Rachel Reeves as she prepares to address crucial economic concerns. Manufacturing firms in the Euro zone, responding to higher costs, increased their prices, although the service sector saw slower price growth. Notably, the area's employment index showed positive trends for the first time in eight months.

(With inputs from agencies.)