HS Markit's flash composite PMI for the euro zone, which looks at activity across both manufacturing and services, hit 52.5 in March versus 48.1 in February.
"The eurozone economy beat expectations in March, showing a much better than anticipated expansion thanks mainly to a record surge in manufacturing output," Chris Williamson, chief business economist at IHS Markit, said in a statement. "The outlook has deteriorated, however, amid rising COVID-19 infection rates and new lockdown measures. This two-speed nature of the economy will therefore likely persist for some time to come, as manufacturers benefit from a recovery in global demand but consumer-facing service companies remain constrained by social distancing restrictions," Williamson said.
"Activity trended towards stabilization, reversing the downward momentum seen in January and February ... That said, there remain ongoing challenges related to the pandemic," Eliot Kerr, an economist at IHS Markit, said in a statement.