Euro-Zone March services PMI was revised up to 40.9 from 40.1 reported initially. This is a marked improvement from the 39.2 in February and brought the composite PMI to 38.3, up from 36.2 in the previous month. The German services PMI was revised up to 42.3 from 41.7, the French reading revised up to 43.6 from 42.9 and the Italian reading improved to 39.1 from 37.9 in February. Readings remain firmly below the 50 point no change mark thus pointing to ongoing contraction in economic activity, but together with improvements in the German ZEW and the Ifo expectations readings data suggest that confidence is slowly starting to bottom out, which is encouraging.
Meanwhile, ECB's Nowotny repeated ECB can still cut interest rates. Nowotny told MNI that "as president Trichet has indicated, there is still room for further reductions in interest rates". He added that yesterday's 25 bp cut showed a "sign of a firm and steady hand of the ECB" and that the latest U.S. economic data are "encouraging, and we hope that it is something that will last". Nothing new in the comments, which support our view, however, that the ECB will cut rates again next month.
