According to the flash report from HCOB, business activity in the private sector of the eurozone improved again in April, exceeding economists' forecasts and reaching the highest level since May 2023. The improvement indicates that the region continues to pull out of the recent downturn, albeit growing only modestly amid divergent sector performances, as a modest recovery of service sector output gained momentum.
The Eurozone Composite PMI Output Index rose in April to 51.4 points from 50.3 points in March. An index value above 50 points indicates an expansion of activity in the sector. Economists had expected the index to rise to 50.8 points. The services PMI rose to 52.9 points (11-month high) from 51.5 points in March, while the manufacturing PMI fell to 45.6 points (4-month low) from 46.1 points. Economists had expected the services PMI to rise to 51.8 points and the manufacturing PMI to reach 46.5 points.
HCOB said that in April manufacturing output fell across the eurozone for a third straight. The rate of decline in factory output eased, however, to the weakest for 12 months. Sector variations were driven by underlying demand conditions. New orders for services rose at the fastest pace since May 2023, up for a second straight month, but new orders for manufactured goods fell at an increased rate. The latter have now fallen continually for two years. Employment in the private sector increased again (for the 4th month in a row), while the growth rate was the strongest since June 2023. Price pressures intensified slightly in April, remaining elevated by pre-pandemic standards, with higher rates of inflation seen for both input costs and average selling prices. Meanwhile, business expectations for the coming 12 months decreased slightly compared to March, but was the second highest in the last 14 months. The drop in confidence in the services sector to a three-month low contrasted with an increase in optimism in the manufacturing sector to its highest level since February 2023.