Eurozone growth edges lower
In April, eurozone business activity growth pulled back from March’s 11-month high, according to Markit’s Purchasing Managers’ Index (PMI).
The index fell from 54.0 in March to 53.5 in April, with the slowdown reflecting weaker rates of expansion in France and Germany. Growth slowed in Germany, following weaker expansions in both manufacturing and services, but remained slightly above the pace of expansion seen across the region as a whole. France saw a steeper slowdown, with growth almost stalling – near-stagnation of service sector growth was accompanied by a faster rate of decline in factory output.
Across the eurozone, average selling prices for goods and services continued to fall, but the rate of decline was the weakest since June of last year.
Manufacturers’ selling prices rose marginally for the first time since last August, as their input prices rose. Rates charged for services meanwhile fell at the slowest rate since June 2014.
Commenting on the data, Chris Williamson, chief economist at Markit said: “The weaker rate of expansion is a big disappointment, given widespread expectations that the ECB’s quantitative easing will have boosted the fledgling recovery seen at the start of the year.
“However, it’s too early to draw firm conclusions about whether growth is faltering again and the effectiveness of policy. Although the PMI has pulled back from March’s recent high, the index remains above the average seen in the first quarter and is indicative of the eurozone economy growing at a reasonably robust quarterly rate of 0.4% at the start of the second quarter.
“The survey also showed growth outside of France and Germany accelerating to the highest since August 2007, raising hopes that stimulus is feeding through to the ‘periphery’.
“The slowdown in April was in fact therefore a symptom of weaker expansions in both Germany and France, with the latter suffering a near-stalling of growth led by an accelerating downturn of its manufacturing economy.
“There are signs of increased risk aversion creeping in among businesses and their customers, linked in some cases to worries about Greece, which is likely to have dampened demand. However, in the case of France, the poor performance appears to reflect a longer-term malaise which, after a promising start to the year, in fact shows few signs of lifting.”