Conditions in the eurozone manufacturing sector remained lacklustre at the start of the second quarter, as rates of expansion eased for both production and incoming new orders. Brighter news was provided on the employment and price fronts, as jobs growth gained momentum and deflationary pressures moderated.
The final Markit Eurozone Manufacturing PMI® ticked higher for a second successive month, posting three-month high of 51.7. This was above March’s 51.6, the earlier flash estimate of 51.5 and the long-run survey average of 51.4. The reading was nonetheless among the weakest registered over the past year.
Of the six nations for which April data were available (Ireland is published on 3rd May and Greece on 4th May), five registered expansions Italy and Spain saw the fastest growth, with rates of increase accelerating slightly in both cases. The Netherlands and Austria posted modest expansions, albeit weaker than in the prior month.
The German PMI meanwhile rose to a three-month high, but remained in the lower half of the PMI growth rankings. France remained in contraction territory during April as the PMI slipped to a 12-month low. France saw new orders and output fall at the steepest rates since February 2015 and April 2015 respectively. Weak domestic demand combined with the worst decline in new export orders for over three years.
Although growth of both eurozone manufacturing production and new orders were slower than in March, the trend in new export business improved slightly. Germany, Italy and Spain all saw stronger gains in new export business. A solid increase was also registered in the Netherlands.
Current inflows of new work were still sufficient to test manufacturers’ capacity, leading to a modest accumulation of backlogs. This encouraged companies to increase employment for the twentieth successive month.
Jobs growth accelerated to its highest rate since January, underpinned by increased employment in almost all of the nations covered by the survey. The sole exception was France, which saw staffing levels decrease for the second month in a row.
April saw further reductions in both output prices and input costs at eurozone manufacturers. However, in a further sign of deflationary pressures easing, rates of decline in both eased over the month.
Input costs fell at the slowest pace in four months, with rates of decrease moderating in all of the nations covered. Lower factory gate prices were meanwhile registered across the board, although by far the steepest reduction was posted in France.