The Eurozone economy remained stuck in a lower gear in April, with business activity expanding at a rate unchanged on March, which had in turn been the slowest since the start of 2017.
Growth has downshifted markedly since the peak at the start of the year, but importantly still remains robust.
The April data are running at a level broadly consistent with Eurozone GDP growth of approximately 0.6% at the start of the second quarter.
Some easing of inflationary pressures from recent elevated levels was reported, as input costs rose at the slowest rate for seven months. Slower growth of costs helped push selling price inflation down to a four-month low. Costs increases remained widespread, however, linked to both higher raw material prices and growing staff costs.
The latter led to service sector costs rising at an increased rate during the month.
By country, growth picked up slightly in both France and Germany, but in both cases failed to recover to February’s levels. While manufacturing acted as the main drag in France, it was the service sector that lagged behind in Germany. Elsewhere, growth slowed to an 18-month low, with both manufacturing and services recording weaker expansions.
Underlying demand has weakened, in part due to exports being hit by the stronger euro. With companies’ future optimism having slipped to the lowest since last year, it looks likely that growth may well slow further in coming months.
Source: Markit economics, https://www.markiteconomics.com