European factory growth stalls in Q1

london — Europe’s manufacturing boom stumbled in March as optimism waned and demand ebbed owing to a powerful winter storm, surveys showed on Tuesday, but expansion was still broadbased across the continent.

Factories in the currency bloc ended 2017 with record strong growth, so any slowdown from that pace is unlikely to stop decision-makers at the European Central Bank moving away from their ultra-easy policy stance.

In Britain, deep in negotiations to leave the European Union, manufacturing growth cooled to a year low in the first quarter of 2018, but a survey there suggested the economy is on a slow but steady course a year ahead of Brexit.

The March survey showed growth in cost pressures for UK factories and their selling prices cooled, something that may reassure Bank of England officials who are keeping an eye on inflation pressures.

Most economists polled by Reuters think the central bank is likely to raise interest rates to a

0.75% interest rates in May expected

new post-financial crisis high of 0.75 per cent in May.

IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) for the eurozone sank to an eight-month low of 56.6 in March from 58.6, in line with an earlier flash estimate and still comfortably above the 50 mark that separates growth from contraction.

An index measuring output, which feeds into a composite PMI due on Thursday which is seen as good guide to economic health, fell to a 16-month low of 55.9 from 59.6, a little below its flash estimate.

Eurozone economic growth has already peaked, a Reuters poll found last month, but the ECB will probably decide this summer to slash its bond purchases if things develop as expected, policymaker Ewald Nowotny said last week. — Reuters