Brussels - Business activity in the eurozone expanded in March for the ninth month in a row, a key indicator showed Monday, adding to hopes that the currency bloc is on the road to economic recovery.

The London-based research group Markit said its closely watched Purchasing Managers' Index (PMI) for the region's manufacturing and service sectors clocked 53.2 -just slightly below the 32-month high of 53.3 that it had hit a month earlier.

Analysts had expected a more pronounced slackening of pace to 53.1.

All readings above 50 indicate expansion in business activity.

“The ongoing upturn in business activity in March rounds off the eurozone's best quarter since the second quarter of 2011,” Markit chief economist Chris Williamson said in a statement.

Particularly encouraging was the fact that France, the eurozone's second-largest economy, saw growth return to its output and new orders, the research group said.

“The improvement in the PMI to a two-and-a-half year high in March adds hope that a fully fledged recovery will be evident in France by the second quarter,” Williamson said.

Germany, the region's economic powerhouse, saw its output grow less than before, but its companies are expected to see “further robust growth in the coming months,” according to Markit.

“The rest of the region also enjoyed its best quarter for three years, providing further evidence that the 'periphery' is staging a robust-looking recovery,” Williamson said.

But he also warned of deflation risks, arguing that “there remains an argument for further stimulus, especially if the rate of growth of activity cools again in April.”

The Markit index is based on a survey of about 5,000 companies in the 18-country eurozone. - Sapa-dpa