Overall business activity in the eurozone grew at its fastest pace in nearly a year this month as a recovery in the region's dominant services industry outweighed a more severe decline in the manufacturing sector, according to a survey.
The divide between service firms and factories is also clear in the country breakdown for Germany and France, the bloc's two largest economies and the only ones to publish preliminary readings of the survey.
HCOB's preliminary euro zone Composite Purchasing Managers' Index (PMI), compiled by S&P Global, jumped to 51.4 this month from 50.3 in March, well above expectations in a Reuters poll of 50.7. This marks the second month the reading has been above the upper 50 level that separates growth from decline.
"The economy of the European region has returned to the growth phase. The PMI for the services sector rose again in April. However, the picture is hampered by an unexpected decline in the manufacturing index," said Christoph Weil at Commerzbank.
Economic growth in the eurozone is expected to be 0.2% in the quarter and 0.3% in Q3, based on a Reuters poll forecast published on Monday.
The flash services PMI jumped to 52.9 from 51.5 last month, also beating all expectations in a Reuters poll which had a median forecast for a more modest rise to 51.8.
Despite all that, manufacturing PMI data fell to 45.6 from 46.1. It was seen disappointing expectations in a Reuters poll for an increase to 46.6. Manufacturing PMI has been below 50 since mid-2022.
However, the index measuring manufacturing output strengthened slightly to 47.3 from 47.1.
An index that measures demand also highlights the differences between the two sectors. The services new business index rose to an 11-month high of 52.1 while the manufacturing new orders reading fell to a four-month low of 43.8 from 46.0.
Private sector activity in Germany, Europe's largest economy, returned to growth this month, driven by a strong increase in activity in the country's services sector and a slowdown in the rate of decline in factory output.
In France, the dominant service industry grew for the first time in nearly a year, helping to offset continued weakness in manufacturing. Meanwhile in Britain, outside the European Union, businesses posted the fastest growth in activity in nearly a year, indicating a larger recovery from a shallow recession. last year that economists expected.
Overall optimism across the eurozone remained strong and firms increased employment at the fastest rate since June last year. The composite employment index rose to 51.8 from 50.9.
