- Service PMI is 53.3, expected 52.9, conventional 51.5.
- Composite PMI is 51.7, expected 51.4, previous 50.3.
Main findings:
- HCOB Eurozone Composite PMI Production Index is 51.7 (March: 50.3). Highest price in 11 months.
- HCOB Eurozone Services PMI Business Activity Index is 53.3 (March: 51.5). Highest price in 11 months.
- Recovery in the services sector will drive growth in April, but price pressures will increase.
comment:
Commenting on the PMI data, Dr Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“This is pretty good. The service provider has now expanded its activity for three consecutive months, putting an end to the lack of dynamism seen in the second half of last year. Encouragingly, we are seeing an increase in new business and orders. Employment is increasing at a faster pace, with orders increasing by the most in 11 months. These trends are fueling optimism among service providers. That sentiment is further reinforced by business expectations, which are currently at a much higher level than the average of the past two years.
“Productivity has become a critical challenge for the services industry and the ECB. Since the beginning of 2021, and even during the downturn in 2022 and 2023, service providers have consistently expanded their workforce. This suggests that companies facing employee turnover may need to hire multiple employees to maintain the same level of output, indicating a decline in productivity. The PMI index for service sector operating costs, which is comprised of unit labor costs, has continued to rise at a rapid pace over the past 12 months, after rising sharply in 2022.The ECB recognizes this trend. Therefore, it is likely that the Bank will proceed cautiously regarding the scope of interest rate cuts.
“Service companies have been successful in passing on some of the increase in operating costs, indicating an improving demand situation. This means that the market structure is not overly disruptive and is characterized by healthy competition. also means
“Spain has outperformed Germany, Italy and France, and its services PMI continues to outperform its economy by several points. Despite political turmoil, Spain appears to be placing a disproportionate emphasis on tourism. Additionally, the Spanish government has placed less emphasis on austerity measures than other top eurozone countries, meaning the economy will be less hit, according to the IMF.
