The euro zone’s economic recovery unexpectedly accelerated this month as the bloc’s dominant services sector saw an already heated surge in demand, more than offsetting a deepening slowdown in output, polls show.
The HCOB Composite Purchasing Managers’ Index (PMI), compiled by S&P Global and seen as a good gauge of general economic health, jumped to an 11-month high at 54.4 in April from 53.7 in March, showed data this Friday.
It was well above the 50 mark that separates growth from contraction and matched the highest forecast in a Reuters poll, which hadn’t expected change since March.
“The HCOB Purchasing Managers’ Indices for the eurozone paint a very favorable 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 the growth is very unevenly distributed. For example, the gap between the partially expanding services sector on the one hand and the weakening manufacturing sector on the other has widened further.”
To meet the growing demand, companies have increased the number of employees at the fastest pace since last May. The employment index jumped to 54.7 in April from 53.3.
The PMI covering the services sector rose to 56.6 this month from 55.0, beating Reuters poll expectations for a drop to 54.5.
Despite the region’s high cost of living, demand for services has improved as consumers continue to spend. The new business index rose to a year-high of 55.8 from 54.2.
But it was a different story for producers of the block, which saw demand drop faster. The main PMI for the sector fell to 45.5 from 47.3, the lowest level since the coronavirus pandemic took hold in the world three years ago.
A manufacturing index, which feeds the composite PMI and spent two months in positive territory, fell to 48.5 from 50.4.
However, further improvements in supply chains meant that the cost of raw materials fell at the fastest pace in nearly three years, so factories raised their prices only marginally. The producer price index fell to 51.8 from 53.4, the lowest since the end of 2020.
Source: Terra
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