The euro zone economy grew at its best pace in nearly a year in April but inflationary pressures are rising

Economic activity in the eurozone surges to an 11-month high: Composite PMI rises to 51.7 as services sector recovers, despite rising inflationary pressures. Spain stands out, with services, particularly tourism, rising and inflation at a one-year high.

The HCOB PMI Composite Index of Eurozone Total Activity, a key indicator of the Eurozone’s private economy and a precursor to GDP, was again above 50 points, leaving the contraction zone of growth at 51.7 points (50.3). in March), marking its highest level in the last eleven months. HCOB PMI Business Activity Index Service Department The euro zone was at 53.3 (51.5 in March), the strongest expansion of services sector activity in almost a year.

The eurozone economic recovery advanced further at the start of the second quarter as aggregate activity growth accelerated and the services sector drove growth in April, but price pressures increased, the latest HCOB PMI survey said. Euro zone companies hired additional staff and extended the current period Employment generation It started at the beginning of the year.

The seasonally adjusted HCOB PMI Composite Index of Eurozone Aggregate Activity, the HCOB PMI Index of Manufacturing Sector Output and the HCOB PMI Index of Business Activity in the Services Sector indicated moderate expansion in aggregate activity. Ways, most pronounced in almost a year.

“A solid and brisk increase in business activity in the services sector boosted recovery efforts in the euro zone in April, while manufacturing output continued to decline. The five euro zone countries for which mixed data were available reported increases in PMI business activity levels early in the second quarter, albeit to varying degrees.”

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As happened in the first quarter of 2024, Spain It was an economy with a better outcomeAnd its growth accelerated until it reached its maximum within a year. Italy Although the pace of increase slowed compared to March, it recorded the fourth consecutive month of growth. The two largest economies in the Eurozone, Germany and FranceThere was an overall increase in economic activity levels for the first time in ten and eleven months respectively, although this was marginal growth.

Rising sales supported increased business activity in April. The New orders Receipts by private sector firms in the euro zone rose for the first time since May 2023, although only marginally, as a sharp drop in demand for goods partially offset a rise in new orders received by service firms.

Data from a recent survey also suggests that Re-enforce the sale New export orders fell for the 26th consecutive month, driven by the domestic market. Eurozone businesses were optimistic that aggregate activity levels would continue to rise over the next twelve months.

Cyrus de la Rubia, Chief Economist at the Hamburg Mercantile Bank, a A very favorable situation. “Ending the lack of activity seen in the second half of last year, services firms increased their activity for the third month in a row. It is encouraging to note that employment has picked up rapidly in line with the recovery. New orders and order book growth experienced their biggest expansion in eleven months.

The Productivity Raises a A critical challenge for the services sector and the ECB. Since the start of 2021, service companies have steadily increased their workforce, even during the weakest phases in 2022 and 2023. This trend suggests that companies facing labor turnover must hire more people to maintain the same level of output. Decrease in productivity. Meanwhile, the PMI index of operating costs in the service sector, which consists mostly of unit labor costs, has continued to rise at a rapid pace over the past twelve months, following a strong recovery in 2022. “The ECB is aware of this trend and is likely to be cautious in its decision-making Purpose of Interest Rate Cut”.

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“The market structure is characterized by healthy competition without excessive destruction,” the economist continued in an opinion accompanying the report. “Spain has overtaken Germany, Italy and France, and its related services BMI index is several points ahead of its peer economies. “Despite the political turmoil, Spain appears to be disproportionately investing in tourism. In fact, according to the IMF, the Spanish government There is less focus on austerity measures This indicates less recession in the economy compared to other major eurozone economies.

Spain is at a one-year high with tourism growth

Tourists in Alicante last summer. Morel

He Private sector economic growth reaching its twelve-month high SpainAggregate activity expanded at a strong and rapid pace, driven by growth in manufacturing output and business activity by service firms, according to data from the April PMI survey. HCOB PMI Composite Total Activity Index for Spain up to 55.7 level, compared to 55.3 in March, thus registering its highest reading in a year. New orders for services fell due to a slowdown compared to March, but job openings continued to grow at a healthy pace. The inflammationAlthough high, it is the lowest it has been this year so far this year.

“Spain’s services economy experienced another month of strong growth in activity amid market demand and signs of further improvement in economic conditions”: he pointed to the HCOB PMI® Spanish Services Sector Business Activity Index. 56.2, best result since May 2023 And for the eighth consecutive month above 50, it is a Prolonged period of increasing activity. Typically, companies attribute the increase in activity to an improvement in new order volumes.

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New orders rose for the fifth month in a row, according to the latest data Companies surveyed expect activity to increase Adapt to new business activities and increased sales. They also expressed hope for a more stable geopolitical and economic environment in the next twelve months.

“Spanish service companies continue to impress with their results,” said Jonas Feldüsen, economist at Hamburg Commercial Bank. The HCOB PMI index confirms the recovery in the economy of the service sector: activity remains positive and its index remains at a high level of 56.2. Activity is driven by a situation Consistently higher order size. Despite recent tensions due to high demand for Spanish services from abroad, especially in the region TourismOrders from abroad have continued to rise as internal political unrest, such as the protests in Gran Canaria, have caused. “Spanish service companies continue to look to the future with optimism.”

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