After a period of sluggish growth, European private sector economic activity showed a strong rebound in April. The flash Purchasing Managers’ Index (PMI) surveys released by S&P Global on Tuesday indicated robust growth in the services sector across major European economies. The Eurozone Composite PMI Output Index rose to 51.4 from 50.3 in April, reaching its highest level in 11 months. The Services PMI increased to 52.9 from 51.5, surpassing the anticipated 51.8, while the Manufacturing PMI decreased from 46.1 to 45.6, falling short of the expected 46.5. The economic recovery is particularly evident in the eurozone’s two leading economies, Germany and France. Germany’s private sector returned to growth in April, with the Composite PMI output index climbing to 50.5 from March’s 47.7, marking its highest level in 10 months. The services sector experienced a notable surge to 53.3, surpassing economist expectations of 50.6 and reaching its highest level since June 2023. France’s Composite PMI rose from 48.3 to 49.9, reaching its highest level in almost a year and signalling a stabilisation in broader economic conditions. While services activity rebounded, marking its first growth since May 2023, the manufacturing sector saw a deepening contraction. However, inflationary pressures are casting uncertainty on the speed of the European Central Bank’s (ECB) rate cuts. Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, warns that “the PMI figures are poised to test the ECB’s willingness to cut interest rates in June.” Accelerated rises in input costs, coupled with faster price hikes in the services sector, indicate a likelihood of sustained inflation. Despite these challenges, de la Rubia still predicts the ECB will lower rates in June, but doubts they’ll do so as quickly as some officials had recently suggested.
European Private Sector Rebounds Strongly in April, Led by Services
