Business activity in Eurozone has witnessed its fastest expansion in nearly a year, driven by a robust recovery in the service industry that outweighed a deeper slump in manufacturing, according to a recent survey cited by Reuters on Tuesday.
The survey highlighted a distinct split between service firms and factories, with Germany and France, the bloc’s two largest economies, being the only ones to release preliminary readings.
The preliminary composite Eurozone Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 51.4 this month from 50.3 in March. This exceeded Reuters poll expectations of 50.7 and marked the second consecutive month of growth.
A Reuters poll published on Monday projected Eurozone economic growth to be 0.2 per cent this quarter and 0.3 per cent in Q3.
The flash services PMI surged to 52.9 from 51.5 last month, surpassing all expectations in the Reuters poll, which had a median forecast of 51.8. However, the manufacturing PMI fell to 45.6 from 46.1, defying expectations for a rise to 46.6. It has been below the 50 mark, indicating contraction, since mid-2022.
Indexes measuring demand also underscored the division between the two sectors. The services new business index climbed to an 11-month high of 52.1, while the manufacturing new orders reading dropped to a four-month low of 43.8 from 46.0.
In Germany, Europe’s largest economy, private sector activity returned to growth this month, fuelled by a strong rise in the service sector and a slowdown in the decline of factory production.
In France, the dominant services industry expanded for the first time in almost a year, helping to counterbalance ongoing weakness in manufacturing.
Meanwhile, businesses in Britain, outside the European Union, recorded their fastest growth in activity in nearly a year, indicating a larger rebound from last year’s shallow recession than economists had anticipated.
Overall optimism across the Eurozone remained high, and firms increased their headcount at the fastest pace since June last year. The composite employment index rose to 51.8 from 50.9.
