Euro Area: Final April PMIs—Services Re-acceleration vs Slowing Manufacturing
BOTTOM LINE:
The final Euro area composite PMI for April was unrevised from its flash estimate of 55.8, reflecting a small downward flash-to-final revision in Germany that was offset by upward revisions in France and the periphery. The Italian and Spanish composite PMIs both improved in April, led by a re-acceleration in the services sector. Today’s data confirms our view that the post-omicron growth momentum in the services sector remains robust going into Q2 amid further easing of virus-related restrictions. But the slowing in the manufacturing sector coupled with rising inflationary pressures is likely to weigh on growth once the recovery from omicron is complete and a ban on Russian gas remains an important downside risk to our forecasts, especially for Germany and Italy.
KEY NUMBERS:
Notes: The survey responses were collected between 08 and 26 April.
·Euro Area Composite PMI (Final, Apr): 55.8; Flash: 55.8; Previous: 54.9
·Germany Composite PMI (Final, Apr): 54.3; Flash: 54.5; Previous: 55.1
·France Composite PMI (Final, Apr): 57.6; Flash: 57.5; Previous: 56.3
·Italy Composite PMI (Apr): 54.5; GS 54.5; Consensus: 54.5; Previous: 52.1
·Spain Composite PMI (Apr): 55.7; GS 54.9; Consensus: 54.9; Previous: 53.1
MAIN POINTS:
1. The final Euro area composite PMI remained unchanged in April from its flash estimate of 55.8, reflecting small offsetting flash-to-final revisions across countries. Specifically, the German composite was revised down by 0.2pts while France and the periphery both saw upward revisions of 0.1pts.
2. The Italian composite PMI improved by 2.4pts to 54.5 in April, in line with consensus expectations. The overall gain was led by services, where the headline PMI increased by 3.6pts to over 55, while manufacturing output declined further in April to 51.1. The composition of the April report was mixed, with new orders and employment increasing but backlogs and new export orders decreasing. Firms’ year-ahead output expectations improved in April to just above their historical average after dropping sharply last month. Suppliers’ delivery times worsened slightly further in April and price pressures remain acute—particularly in manufacturing—with both input and output price components near all-time highs.
3. The Spanish composite PMI increased by 2.6pts to 55.7 in April, above consensus expectations. As in other Euro area countries, the overall gain was concentrated in services, where the headline PMI rose by 3.7pts to 57.1, whereas manufacturing output declined further to 50.7. The composition of the April report showed slight improvements in backlogs and new orders, but new export orders remain below 50 in contractionary territory and employment edged down further in April as well. Firms’ year-ahead output expectations rebounded in April after having dropped sharply last month and suppliers’ delivery times—which remain long still—improved in April after worsening last month for the first time since November last year. Price pressures also moderated slightly—with both input and output price components decreasing in April— but remain acute still.
4. Today’s print, which showed little revisions from the flash print last week, confirms our view that the post-omicron growth momentum in the services sector remains robust going into Q2 amid further easing of virus-related restrictions. But the slowing in the manufacturing sector coupled with rising inflationary pressures is likely to weigh on growth once the recovery from omicron is complete and a ban on Russian gas remains an important downside risk to our forecasts, especially for Germany and Italy.
MAIN POINTS:
1. The final Euro area composite PMI remained unchanged in April from its flash estimate of 55.8, reflecting small offsetting flash-to-final revisions across countries. Specifically, the German composite was revised down by 0.2pts while France and the periphery both saw upward revisions of 0.1pts.
2. The Italian composite PMI improved by 2.4pts to 54.5 in April, in line with consensus expectations. The overall gain was led by services, where the headline PMI increased by 3.6pts to over 55, while manufacturing output declined further in April to 51.1. The composition of the April report was mixed, with new orders and employment increasing but backlogs and new export orders decreasing. Firms’ year-ahead output expectations improved in April to just above their historical average after dropping sharply last month. Suppliers’ delivery times worsened slightly further in April and price pressures remain acute—particularly in manufacturing—with both input and output price components near all-time highs.
3. The Spanish composite PMI increased by 2.6pts to 55.7 in April, above consensus expectations. As in other Euro area countries, the overall gain was concentrated in services, where the headline PMI rose by 3.7pts to 57.1, whereas manufacturing output declined further to 50.7. The composition of the April report showed slight improvements in backlogs and new orders, but new export orders remain below 50 in contractionary territory and employment edged down further in April as well. Firms’ year-ahead output expectations rebounded in April after having dropped sharply last month and suppliers’ delivery times—which remain long still—improved in April after worsening last month for the first time since November last year. Price pressures also moderated slightly—with both input and output price components decreasing in April— but remain acute still.
4. Today’s print, which showed little revisions from the flash print last week, confirms our view that the post-omicron growth momentum in the services sector remains robust going into Q2 amid further easing of virus-related restrictions. But the slowing in the manufacturing sector coupled with rising inflationary pressures is likely to weigh on growth once the recovery from omicron is complete and a ban on Russian gas remains an important downside risk to our forecasts, especially for Germany and Italy.
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