Eurozone manufacturing PMI hits 4-month low in April

Manufacturing activities across the Eurozone decreased in April as the drop in demand caused prices to fall in factories again, pushing firms to reduce employment.

Europe’s regional disparity in performance

Circumstances differ throughout the European region. France and Italy underperformed, while Spain expanded at the fastest rate in almost two years. Unlike France and Italy, Spain recorded a quick increase in activity.

According to the newest Eurozone manufacturing Purchasing Managers’ Index reported by S&P Global and published by HCOB, manufacturing dropped to 45.7 in April after March’s 46.1. The index further shrank for the 22nd consecutive month. The reading is below expectations, but at 46.8, it is slightly above the flash estimate of 45.6.

Meanwhile, the output index fell to 47.1 in March from 47.3 in April, in line with the data. After a boost in April.

Country specific performance

 Italian manufacturing activity retreated, with output and new orders both falling once more. France’s headline PMI also slipped as production and demand fell again. Although the German PMI is approaching the breakeven point, the purchasing fall has accelerated.

Spain, conversely, had an exceptional month in April, which was supported by a report from the nation’s statistical agency released earlier this week, which indicated that the remaining growth of the Spanish economy during the last quarter was considerably higher than predicted, posting an undamaged 0.7%.

Central Europe’s manufacturers were also in distress in April, with factory activity in Poland reporting a further decline and the Czech Republic and Hungary’s ratings easing.

The new orders index, which has dropped to 50 or below for 11 months through May 2022, fell to 44.1, a four-month low, from 46.0. This implies that a crisis remains.

Inflation concerns

Factories continued running down their stockpiles of purchased and final goods while reducing their workforce for the eleventh month running. Meanwhile, official data issued on Tuesday revealed that the Eurozone’s economy expanded from mild recession in the fourth quarter to 0.3% in January-March.

Manufacturers have attempted to rein in rates, and the manufacturing sector has suffered severely from inflation. Data from Tuesday heightened expectations that the ECB would reduce borrowing costs in June, as inflationary pressures are visibly abating.

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