Thus, the composite PMI fell to 50.7 points from 51.9 a month earlier, which was the slowest growth rate since June 2025. The indicator remained above the threshold of 50, but was below the historical average of 52.4.
The main reason for the slowdown was the services sector, with the index falling to 50.2, its lowest level in ten months. At the same time, industry maintained a steady growth in production.
Among the eurozone countries, Spain grew the fastest in March. It was followed by Ireland, despite slowing to a six-month low. In Germany, business activity continued to grow, but at a more subdued pace than at the start of the year. France and Italy showed a decline.
Demand falls – staff cuts
Demand began to deteriorate: total new orders fell for the first time since July 2025, primarily in the services sector. Export orders also fell, although the decline was moderate.
Against this backdrop, companies began to cut staff. Employment fell most sharply over the past 13 months, and mainly in manufacturing.
Additional pressure is being exerted by rising costs. In March, it accelerated to the highest level in more than three years. Raw material prices rose particularly sharply in manufacturing, while the services sector also recorded large cost increases. Companies continued to raise prices, but tariff increases lagged behind cost increases.
Business expectations deteriorated for the first time since December 2025 and fell to a near one-year low.
Downside risks remain
Chris Williamson, chief economist at S&P Global Market Intelligence, noted that the eurozone economy is under severe pressure due to the conflict in the Middle East. According to him, rising energy prices, disruptions in supply chains and instability in financial markets have offset the positive signals of the beginning of the year.
According to S&P Global estimates, eurozone GDP growth in the first quarter may reach about 0.2%, but risks of economic slowdown in the second quarter remain.
