Business activity growth in the euro area unexpectedly picked up in April. The services sector saw a further increase in already strong demand, more than offsetting the deepening decline in manufacturing. This is according to the preliminary results of a survey of purchasing managers published today by S&P Global. The composite index (PMI), which tracks activity in both industry and services, rose to 54.4 points from 53.7 points in March.
Analysts had predicted in a Reuters poll that the index would remain at March’s figures in April. If the index is above the 50-point mark, it signals a rise in activity.
Economies are recovering
“The purchasing managers’ indices for the euro area show a very favourable overall picture of an economy that continues to recover,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “However, a closer look reveals that growth is very unevenly distributed. For example, the gap between the partially thriving services sector on the one hand and the weakening manufacturing sector on the other is widening further,” he added.
The PMI covering the services sector climbed to 56.6 from 55.0 this month. In contrast, analysts in a Reuters poll had estimated it would fall to 54.5 points.
Production at the lowest level since Covid-19
A completely different picture was provided by manufacturers in the euro area, which saw a faster decline in demand. The sector’s headline PMI fell to 45.5 from 47.3, the lowest reading since the covid-19 pandemic was in full swing three years ago.
But raw material costs fell at their steepest pace in almost three years thanks to further improvements in supply chains. That’s good news for the European Central Bank (ECB), which is struggling to get inflation to its stated 2% target. The ECB is expected to raise rates for a seventh consecutive quarter-percentage point on May 4, although even a more substantial increase is not out of the question, Reuters sources said.
Source: czech news agency