Eurozone PMI Services was finalized at 51.5 in March, up from February’s 50.2, a 9-month high. PMI Composite was finalized at 50.3, up from prior month’s 49.2, a 10-month high.

Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said the service sector is “gradually finding its footing.” He further highlighted the importance of wage growth outpacing inflation, enhancing households’ purchasing power and supporting the service sector’s revival. However, he tempered expectations by noting, “a full-fledged boom is not on the horizon.”

Despite economic challenges, service providers have continued to expand their workforce. Moreover, business expectations within the service industry have soared to their highest in over two years, surpassing the long-term average.

Meanwhile, March witnessed a slight deceleration in inflation regarding both costs and sales prices, a development likely to be viewed favorably by ECB. Despite this positive sign, de la Rubia cautioned against premature conclusions about a turning trend in inflation, maintaining the forecast that interest rate cuts are more likely in June than in April.

Full Eurozone PMI services final release here.

Eurozone Sentix Investor Confidence rose from -17.5 to -8.0 in February, above expectation of -11.8. That;s also the highest since March 2022. Current Situation Index rose from -19.3 to -10.0, highest since June 2022. Expectations Index rose from -15.8 to -6.0, highest since February 2022. All three indexes had the fourth increase in a row.

Sentix said: “Up to now, investors have been assuming a recession, the course of which was initially expected to be severe but has now eased considerably. With the recent improvement, the scenario of stagnation is gaining in contour. The absence of an energy crisis and the rosy corporate news are contributing to the turnaround from the original recessionary path.”

“However, the following must be critically observed: So far, the improvement in all subcomponents is running at a negative level. In addition, it is noticeable that the expectations component is hardly running ahead of the current situation. Normally, at economic turning points, the expectations values turn positive much faster, while the current situation is still deep in the red. In these cases, a new, positive perspective emerges. However, this has not been the case so far! Investors expect the status quo of the economy to be maintained to some extent. Stagnation with mini-growth would be the consequence.”

Full release here.