The eurozone economy continued to grow at the start of the second quarter, according to the latest purchasing managers’ index (PMI) survey from Hamburg Commercial Bank (HCOB). The survey revealed that economic activity expanded for the fourth consecutive month, with growth accelerating to an 11-month high. This indicated a further gaining of momentum following upturns in February and March.
The strong increase in output in April was solely driven by growth in the services sector. However, manufacturing production fell for the first time since January, with beleaguered order books for the sector being offset by a strong improvement in demand for services.
Inflationary pressures continued to subside, with input price pressures easing to a 26-month low. Output prices were subsequently lifted to the softest extent in two years.
Italy showed a particularly strong upturn in April, with growth close to a one-and-a-half-year high. The largest economy in the euro area, Germany, also exhibited stronger momentum, compared with a softer and modest expansion in France.
The improvement in demand conditions was a key driver of greater euro area business activity levels in April. New order inflows picked up for a third consecutive month, rising moderately and at the quickest pace since May 2022.
However, higher new business was limited to domestic sources, according to the survey data. New export orders fell for a fourteenth month in a row, although the decline in sales to foreign customers eased to the weakest in close to a year.
Overall, the HCOB PMI survey suggested that the eurozone economy is continuing to recover, albeit with some notable variations between individual countries and sectors. Despite the challenges faced by the manufacturing sector, the resilience of the services sector and improving demand conditions bode well for future growth prospects.