March Sees Slowdown in Eurozone Growth Rate

07 April 2008

HENLEY-ON-THAMES, UK: Although still in expansionist mode, growth is slowing in the Eurozone – the eight largest European economies (Austria, France, Germany, Greece, Ireland, Italy, Netherlands and Spain) within the fifteen nation euro currency area.  

The latest reading of the Eurozone Composite Output Index from NTC Economics is equal to the 33-month low recorded in January, the joint-weakest monthly expansion in over three years.

These are the key findings from the March survey, which covers both manufacturing and service industries:

  • Output
    National trends in each of the Big Four euro countries in March, grew more divergent during the month.
    France registered the strongest rate of expansion but the rate of increase slowed to a five-month low as growth cooled in both services and manufacturing.
    Output also rose in Germany, though the rise was less than the four-month high seen in February.
    It fell in Italy for the third successive month, though the rate of contraction eased slightly compared to the 33-month high seen in February to register only a marginal decline during the month.
    While in Spain output contracted for the third month running, dropping at the steepest rate since the survey began eight-and-a-half years ago.
  • New Business
    Growth slowed to only a very modest pace. New business levels fell for the fourth successive month in both Italy and Spain. The rate of increase meanwhile slowed to a 26-month low in France. Of the big-four nations, only Germany saw faster growth of new business, with the pace hitting a seven-month high due to improved new orders for manufactured goods.
  • Employment
    Growth was the slowest in nineteen months. A slight upturn in manufacturing job creation was countered by a marked easing in the service sector, resulting in almost identical rates of employment growth in both sectors. Employment trends deteriorated in all big-four countries. While further growth was registered in both Germany and France, headcounts fell in both Italy and Spain.
  • Input prices
    Inflation surged to the highest since July 2006. Higher food and energy prices were largely to blame. Cost pressures picked up in both the service sector and manufacturing, hitting four- and eighteen-month highs respectively. Of the big-four countries, the highest pace of input price inflation was again recorded in France, followed by Italy. Only Spain saw a cooling in the rate of input cost inflation, though this merely represented a slight easing from February's seven-year peak
Eurozone Service Sector Indexes are currently based on data from panels for Germany, Italy, France, Spain and Ireland. Combined, these countries account for an estimated 83% of Eurozone private sector services output.

Although coverage is incomplete, the proportion of total activity covered by the survey means that the data should be regarded as a good indicator of overall economic conditions.

The service sector survey data cover around 2,000 companies, with the contribution from each company weighted according to company size to produce individual country indices. The data for each country are then combined using weights determined by national contribution of services output to total Eurozone services output.

The data are currently based on the results of surveys carried out in Germany, France, Spain, Italy, Austria, Ireland, Greece and the Netherlands (plus the UK, Poland and the Czech Republic for the EU data), covering over 6,000 manufacturing and services companies. These countries together account for an estimated 92% of total E

Data sourced from NTC Research (UK); additional content by WARC staff