Eurozone economy showed signs of stagnation in April as its Composite PMI slipped to 50.1, down from 50.9 in March—a four-month low. The decline was driven primarily by a downturn in the services sector, which contracted for the first time in five months, with the PMI falling from 51.0 to 49.7. In contrast, manufacturing showed unexpected resilience, with PMI ticking up slightly from 48.6 to 48.7, reaching a 27-month high.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that manufacturers appear “not too fazed” by the recent imposition of broad US tariffs, including 10% general duties and 25% on autos.
He pointed to falling energy prices, driven in part by US recession fears, and planned increases in defence spending as factors supporting the manufacturing sector. However, the decline in services activity has dragged down overall output, pushing the Eurozone economy into what de la Rubia called “stagnation territory.”
ECB may find some comfort in the latest inflation signals. While input costs in services remained elevated, the pace of selling price increases eased. In the goods sector, input prices fell, breaking a four-month trend of rising costs, while output prices saw only a modest rise.
At the country level, both Germany and France mirrored the regional trend, with manufacturing output gaining but services activity declining.
