PMI in the euro zone is the lowest in 10 months. The economic outlook has deteriorated significantly
Before the conflict in the Middle East, there was great optimism among European businesses. There's not much left of it. “The war put an end to hopes for short-term growth acceleration. Companies were much less optimistic in March, reporting significant increases in production costs and disruptions in supply chains,” says an ING economist.
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The PMI is a measure of economic activity based on monthly surveys conducted among logistics managers in the manufacturing and service sectors. Its value above 50 points indicates the sector's growth, while a result below this threshold signals its contraction, which makes it a key warning signal for investors and politicians about changes in GDP.
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PMI for industry and services in the euro area. The worst result in 10 months
The PMI for the euro area in March 2026 fell to the lowest level in 10 months, from 51.9 to 50.5 points. “The study suggests that the manufacturing sector has so far been less affected than the services sector, and input prices are rising again. The economic outlook has deteriorated significantlybut now everything depends on the development of the conflict,” comments Bert Colijn, ING economist.
recalls that before the conflict in the Middle East there was great optimism among European businesses. Economic growth remained at a decent level compared to the previous quarters, and expectations of increased public investment strengthened producers' hopes for economic recovery.
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“But the war ended hopes for short-term growth acceleration. Companies were much less optimistic in March, reporting significant increases in production costs and disruptions to supply chains” – points out Bert Colijn.
A bright spot in the new data is the manufacturing sector, where the PMI index remained stable (51.7 points compared to 51.9 in February). This still indicates decent production growth, but the mood among producers has become more pessimistic.
At that time, the PMI index for the services sector had already recorded a significant decline, from 51.9 to 50.1 points.
PMI indices. The weaknesses of the euro zone are coming to light
“The weaknesses of the euro zone are once again coming to light. For energy-intensive industries, this means that economic recovery will be more difficult to achieve, which has significant implications for overall production. “Consumers are less confident as prices at gas stations have risen sharply, meaning household consumption may be under pressure despite decent wage growth,” comments an ING economist.
He estimates that the return to strength of the euro zone economy largely depends on the duration of the conflict in the Middle East. A fairly quick end to the conflict would strengthen hopes for its moderate impact on consumer prices and increase the chances of a rebound in industry. However, as the PMI shows, business conditions have deteriorated for now and optimism is waning.
