April Eurozone PMI Composite Reading Strengthens To 6-Year High Of 56.7

The flash Eurozone Markit PMI manufacturing index for April strengthened to 56.8 from the March reading of 56.2. This was above expectations of a figure of 56.0 and the strongest reading for six years.

The services-sector index also strengthened to a six-year high of 56.2, although with only a limited advance from the March reading of 56.0 and marginally above consensus expectations.

The composite output index strengthened to 56.7 from 56.4 previously, also the strongest reading for six years.

There was further strong growth within the manufacturing sector at the strongest pace since March 2011 with export orders also at the strongest pace for six years, although there was a moderation in growth for services-sector orders.

There was further strong growth in employment with manufacturing jobs increasing at the strongest rate for 17 years.

There was further upward pressure on input prices with a fresh increase to match February’s level. The increase in output prices also held close to 6-year highs.

Supply chains continued to tighten with a further increase in supplier delivery times while there was further upward pressure on wages which will tend to maintain upward pressure on prices.

According to Markit, the upturn has been increasingly broad based with the pace of growth outside Germany and France the strongest for 10 years. The data would be equivalent to GDP growth of around 0.7% for the second quarter.

The French PMI data was notably above expectations, although the German data was mixed with a robust reading in the manufacturing sector offset by a retreat for the services-sector index.

The data overall will maintain confidence surrounding the Eurozone growth outlook even with the weaker figure for German services. Indeed, the strength of data outside Germany will be important in boosting wider confidence in the overall Eurozone outlook.

The ECB is unlikely to change policy or make an adjustment to forward guidance at next week’s policy meeting. The data will, however, also maintain expectations that the bank will look to make policy adjustments at the June policy meeting.

The immediate market reaction tended to be over-ridden by political uncertainty ahead of Sunday’s first round of voting in the French Presidential election. EUR/USD held above 1.0700 while German bunds were slightly lower on the day.

Eurozone PMI Index and GDP

europmi

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Tim is a contributing author to EconomicCalendar.com. He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.