Eurozone Private Sector Activity Moves Closer To Stagnation

(RTTNews) - The euro area private sector moved closer to stagnation in April as activity was held back by faster reduction in orders amid the escalating trade tariff concerns, the results of the latest purchasing managers' survey by S&P Global showed on Wednesday.

The HCOB flash composite output index eased to 50.1 in April, which was only slightly above the 50.0 no-change mark.

The score was down from 50.9 in March and also hit the lowest in four months. Economists had forecast the index to slip to 50.3.

The survey showed contrasting trends between manufacturing and service sectors. Services activity dropped marginally, ending a four-month sequence of growth, while manufacturing production showed the most marked increase since May 2022.

The flash services Purchasing Managers' Index dropped to a five-month low of 49.7 in April from 51.0 in March. By contrast, the flash manufacturing PMI rose to 48.7, the highest in 27 months, from 48.6 in the previous month.

Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said most euro area manufacturers are not too fazed despite the U.S. imposing general tariffs of 10 percent and car tariffs of 25 percent early in April.

The economist observed that the service sector has turned into a bit of a party pooper, pushing the whole economy into stagnation territory.

Germany's private sector activity reported its first fall in four months after growth hit a ten-month high in March as trade tariff concerns damped business confidence and demand.

The flash composite output index fell to 49.7 in April from 51.3 in March. The services PMI fell to a 14-month low of 48.8 from 50.9 a month ago. At the same time, the factory PMI registered 48.0 compared to 48.3 in March.

On the other hand, France private sector activity came under renewed pressure in April due to pronounced demand weakness in the domestic market and sharp deterioration in confidence. The HCOB flash composite output index registered 47.3 in April, down from 48.0 in March.

The services PMI slid to 46.8 in April from 47.9 in the previous month. The factory PMI posted 48.2, down from 48.5 a month ago. The PMI survey showed that Eurozone companies were reluctant to expand production given a further reduction in new orders. The latest fall was the most marked in the year-to-date. New export orders decreased continuously since March 2022. Business sentiment fell to the lowest since November 2022 and the fall in confidence was widespread.

Employment broadly stagnated in April as a solid reduction in manufacturing staffing levels outweighed a moderate increase in workforce numbers in the service sector.

Regarding prices, the survey showed that input costs grew at the slowest pace since November. Output prices increased at a weaker pace, with the rate of inflation easing to a five-month low.

Manufacturers continued to scale back their purchasing activity in April, extending the current sequence of decline to 34 months. Rates of reduction in both stocks of purchases and finished goods also slowed in April, easing to 24- and six-month lows respectively.

Meanwhile, suppliers' delivery times shortened for the third consecutive month in April.