LONDON (Reuters) – Euro zone business activity unexpectedly grew this month, a preliminary survey showed, but with much of Europe suffering a third wave of coronavirus infections and renewed lockdown measures, that may not last through April.
Factories ramped up output at the fastest monthly pace in over 23 years, countering a continuing slowdown in the currency bloc’s dominant services industry, which is far more vulnerable to lockdowns and the region’s slow vaccine rollout.
IHS Markit’s flash composite PMI, seen as a good guide to economic health, bounced above the 50 mark separating growth from contraction, to 52.5 in March compared to February’s 48.8, its highest since late 2018.
Even the most optimistic respondent in a Reuters poll had forecast it would rise to 51.0, while the median predicted only a modest increase to 49.1.
“March’s rise in the euro zone composite PMI pushed it back above the 50 mark for the first time in six months, but the recent tightening of restrictions in a number of countries suggests that the improvement will not be sustained,” said Jessica Hinds at Capital Economics.
Indicating Europe’s largest economy was so far shrugging off pandemic lockdowns, German factory activity rose to a record high and the services sector expanded after five successive months of contractions.
In France, the 19-country euro zone’s second-largest economy, activity held up better than expected, with manufacturing surging ahead at the fastest pace in more than three years.
A rush of new orders in anticipation of an easing of lockdown restrictions, and Britain’s swift roll-out of COVID-19 vaccines, also prompted a much stronger rebound for British companies, who are outside the euro zone and the European Union.
DIVERGENCE
A flash PMI covering the euro zone services industry rose to 48.8 from February’s 45.7, still in contractionary territory but its highest reading since August, and well above the median expectation in a Reuters poll for 46.0.
A big jump in input costs led services firms to increase their prices for the first time in just over a year. The output prices index climbed to 50.8 from 48.1.
Any sign of increasing price pressures may be welcomed by the European Central Bank, which has struggled to get inflation anywhere near its target, but a Reuters poll earlier this month suggested the pick-up would be shortlived. [ECILT/EU]
Meanwhile, booming demand for manufactured goods helped the flash factory PMI soar to 62.4 from 57.9, comfortably the highest reading since the survey began in June 1997 and well above all forecasts in a Reuters poll that predicted 57.7.
An index measuring output, which feeds into the composite PMI, jumped to a survey high of 63.0 from 57.6.
The manufacturing upturn was led by a record surge of factory production in Germany, accompanied by the fastest production growth since January 2018 in both France and the region as a whole, IHS Markit noted.
That jump in output came as euro zone factories tried to meet soaring demand, also at a survey high, with the new orders index at 64.2 versus February’s 57.8.
“The manufacturing sector seems to be in boom territory at the moment,” said Bert Colijn at ING.
“New orders increased in March, with export orders growing especially quickly, indicating that the euro zone profits from the rest of the world being much more open in this phase of the pandemic.”
Meanwhile, hopes the vaccine programme would accelerate and allow a return to some sort of normal life, optimism remained elevated. The composite future output index only dipped from February’s three-year high of 67.0 to 66.8.
(Reporting by Jonathan Cable; Editing by Catherine Evans)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
