Eurozone: Weaker than expected PMIs - ING

Peter Vanden Houte, chief economist at ING, explains that the Eurozone’s flash estimate for composite PMI indicator for April came in at 51.3, a decline from 51.6 in March and once again undershooting the consensus expectation of 51.8.

Key Quotes

“The Manufacturing PMI rose to 47.8, though this is still in contractionary territory. The service sector PMI fell back to 52.5 from 53.3 in March.  New order growth picked up slightly, but new export orders fell for the seventh straight month.”

“Employment growth increased but remained among the lowest since 2016. Although cost inflation was higher, partially driven by higher oil prices, average prices charged for goods and services rose at the slowest rate in 20 months, a testimony of the current lack of pricing power. No wonder consumer price inflation is still going nowhere.”

“Since the second quarter of 2018, the eurozone economy has been persistently undershooting expectations. Today’s figures continue this long string of underperformance. But we shouldn’t get too pessimistic either. The recent upturn in China is a boon to Europe’s economy as it is much more dependent on foreign demand than the US.”