Europe towards economic recovery, but something doesn't add up

The Eurozone approaches economic growth in March, beating expectations in preliminary March PMI data.
However, the recovery has emerged uneven, with strong momentum in services activity offsetting a more severe downturn in the manufacturing sector.
The 20-member currency region avoided a recession late last year, even as economists expect growth of just 0.1% in the first quarter and output growth of just 0.5% for 2024.
Europe, what recovery? Data and growth shadows In the Eurozone, the HCOB preliminary composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 49.9 this month from 49.2 in February, beating expectations 49.7 in a Reuters poll, but marking its 10th month below the 50 level that separates growth from contraction.
The credit for the momentum went entirely to services, which gained more strength than economists expected, while the manufacturing indicator unexpectedly fell to a three-month low.
read also Is there a new alarm about the price of gas in Europe? The PMI covering the bloc's dominant services sector rose to a nine-month high of 51.1 from 50.2 in February, well above the Reuters poll estimate of 50.5.
Demand for services increased for the first time since June.
The manufacturing PMI instead fell to a three-month low of 45.7 from 46.5, far below all expectations in the Reuters poll which had forecast an increase to 47.0.
“If you were hoping for a recovery in the manufacturing sector in the first quarter, you have to throw in the towel,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
“There is, however, a glimmer of hope.
Companies remain optimistic about future production.” Furthermore, Germany's economic recession eased slightly in March as business activity in the services sector of Europe's largest economy moved closer to stabilisation.
However, the recession has deepened in France as demand for goods and services has worsened and employment has fallen.
“Germany is not getting back on track,” de la Rubia said.
“The manufacturing sector ended the first quarter of 2024 at a staggering rate of contraction, echoing the difficulties of the previous month.” read also Birth alarm in Germany, thus the recovery recedes In summary, according to economist David Powell speaking on Bloomberg, the general picture shows that, although production is struggling to expand, it is still far from collapsing.
This will allow the Governing Council to buy time before lowering interest rates.
“We expect the first interest rate cut to happen in June,” he predicted.