The eurozone continued to show only modest growth in April, according to the latest flash PMI® data. The Markit Eurozone PMI dipped from 53.1 in March to 53.0 in April, according to the preliminary reading based on approximately 85-90% of normal monthly replies.
The PMI suggests the pace of economic growth at the start of the second quarter is marginally weaker than the average seen in the first quarter, and slightly slower than the average seen last year. Only moderate growth was again seen in both manufacturing and services. In both cases the rates of expansion were just below the averages for the first quarter of 2016.
Growth of new orders improved to a three-month high, but was slightly below the average seen over the past year. Subdued rates of increase were signalled for both goods and services.
Similarly, employment growth picked up slightly in both sectors but remained subdued, meaning the overall increase failed to match the rate of job creation seen around the turn of the year. Backlogs of work barely rose, continuing the near-stagnant trend seen in both manufacturing and services over the past three months, which suggests that current capacity levels and employment growth are adequate to meet demand.
Input prices rose, albeit only modestly, for the first time in four months, reflecting higher costs in the service sector and an easing in the rate of decline of manufacturing input prices to a four-month low, largely due to some firming of commodity prices.
Average selling prices continued to fall, however, as firms often offered discounts to win sales. The rate of decline nevertheless eased to suggest some moderation of deflationary pressures. Slower reductions in charges were registered in both manufacturing and services.
Expectations about future business activity in the service sector remained in line with the average seen in the first quarter.
France edged out of the stagnation seen in March, but continued to act as a major drag on the region with only a marginal increase in activity. Growth meanwhile slowed for the fourth month running in both Germany (nine-month low) and in the rest of the region (14-month low).
Here’s how Chris Williamson, Chief Economist at Markit, summarized the results:
The eurozone economy remains stuck in a slow growth rut in April, with the PMI once again signalling GDP growth of just 0.3% at the start of the second quarter, broadly in line with the meagre pace of expansion seen now for a full year. A failure of business expectations to revive following the ECB’s announcement of more aggressive stimulus in March is a major disappointment and suggests that the modest pace of growth is unlikely to accelerate in coming months.
