Eurozone business activity rallies: PMI index

(BRUSSELS) - The recovery of the eurozone's manufacturing sector is holding up, with activity showing the ninth month of growth in a row, and the gap among major economies narrowing, a survey showed on Tuesday.

Markit Economics said on Tuesday that its Eurozone Composite Purchasing Managers Index (PMI) for March stood at 53.0, down from February's 53.2 but making for an average rise over the first quarter as a whole (53.4), "the best outcome since the second quarter of 2011".

"Despite having cooled slightly in March, the euro area manufacturing sector continues to enjoy its best spell of growth since early 2011," said Markit economist Chris Williamson.

The index is a leading indicator of activity and is closely watched by economists. A reading above the 50-point threshold indicates a growth in activity, while less than 50 indicates a contraction.

"The rate of output growth remains encouragingly robust, with the survey indicating that production rose by around 1 percent in the first quarter," Williamson said.

The goods-producing sector was on course to provide a "meaningful boost" to the overall economy in the first three months of the year.

According to German bank Berenberg, the sharp rise in France's PMI to 52.1, along with Spain and Italy's modest improvement in manufacturing sentiment (52.8 and 52.4 respectively), suggested that the gap between eurozone countries was closing.

"The real story is the convergence of national components," said Berenberg economist Christian Schulz, while warning that once uncertainty over Crimea eases, German manufacturing, with a March PMI of 53.7, could again widen the gap with other eurozone economies.

Economic research company Capital Economics says that for central European eurozone economies, the latest PMI figures pointed to strong manufacturing growth, in spite of a slight dip in March.

However, Capital Economics said that Russia's manufacturing sector -- which is not covered by the Markit PMI figures -- had declined as a result of "capacity constraints" and a lack of investment.