Euro-Area Factory Recovery Broadens as Italy, France Improve

• Euro-Area Factory Recovery Broadens as Italy, France Improve

Euro-area factory growth accelerated in March, as an improving global economy boosted export demand in the region’s biggest economies.

IHS Markit said its Purchasing Managers’ Indexes for Germany, France and Italy all rose compared with the previous month, helping to pushing its euro-region gauge to 56.2 in March, the highest since 2011, from 55.4 in February. New export business increased in all three nations.

Markit also warned of potential inflationary pressure linked to the euro and rising commodity prices. Output-price growth strengthened in March and was close to a six-year high, while suppliers struggled to meet growing demand.

“Euro-zone manufacturing is clearly enjoying a sweet spell as we move into spring, but it is also suffering growing pains in the form of supply delays and rising costs,” said Markit chief business economist Chris Williamson. “These delays send a warning signal about rising inflationary pressures, as busy suppliers are often able to hike prices.”

The European Central Bank has acknowledged that the recovery is firming, but President Mario Draghi maintains that inflation is not yet self-sustaining enough to justify an end of extraordinary monetary support.

That view was endorsed by ECB Executive Board member Benoit Coeure on Friday, when he said that underlying inflation is “subdued,” though he acknowledged that the ECB would have to be nimble if the outlook changed.