The initial reading of the euro area composite Purchasing Managers’ Index (PMI) for March came in at 53.2. This is a slight retraction from February’s reading of 53.3, which was the highest for 32 months, but stays close to three-year highs. PMI readings above 50 mean that the sector remains in expansion territory.

New-order growth accelerated to the fastest rate since May 2011, while the increase in backlogs of work was the largest since June 2011. Employment rose for a second month, providing another sign of the eurozone’s economic recovery. The March reading matched predictions by economists in a Bloomberg News survey.

In the meantime, the UK inflation rate, as measured by the Consumer Prices Index, slipped to 1.7 per cent in February from 1.9 per cent in January, according to data published by the Office of National Statistics.

This means inflation fell further below the Bank of England (BOE)’s two per cent target and to its lowest rate in over four years. The drop was affected by a fall in motor fuel prices.

In January, inflation stood at 1.9 per cent. The February inflation matched the median estimate in a Bloomberg News survey. Low inflation gives the BOE scope to keep interest rates at a record low to support the recovery.

Finally, the initial reading of a US manufacturing index published by Markit Economics fell to 55.5 in March from 57.1 in February. This reading was the second-highest since January 2013. A Bloomberg survey predicted a reading of 56.5.

Most manufacturers said they were churning out plenty of goods as demand remained resilient. According to Markit, manufacturers also continued to increase their workforce in anticipation of stronger growth in the broader US economy. This may mean that the US economy is poised for springtime bloom.

The biggest negative in the Markit report was exports, as the increase in foreign new orders was much weaker compared to demand from US customers.

This article was compiled by Bank of Valletta for general information purposes only.