According to the preliminary report from S&P Global, in April, the growth of activity in the private sector of the eurozone accelerated, which was facilitated by an unexpected increase in activity in the services sector. Meanwhile, business expectations for the coming year also rose, retreating from the 17-month low reached in March. However, prices for goods and services recorded record growth in April in response to a significant increase in company costs.
The Eurozone PMI Composite Output Index rose to 55.8 points in April, compared with 54.9 points in March. The last value was the highest since September 2021.
The data also showed that the services PMI rose to the highest level since August 2021 - to 57.7 points from 55.6 points in March, helped by the easing of coronavirus restrictions. Economists had expected the index to decline to 55.0 points. Meanwhile, the index of new orders rose to the highest value since August 2021 amid increased demand. Meanwhile, the manufacturing PMI fell to 55.3 points from 56.5 points in March. Consensus estimates suggested a drop in the index to 54.7 points. New orders for goods grew at the weakest pace since June 2020, which was due to a sharp rise in prices, a reduction in the cost of living and signs of increased risk aversion due to the Russian-Ukrainian war.
S&P Global reported that the number of backlogs orders in the private sector continued to grow at a high pace, mainly due to the increase in these orders in the service sector to the highest level since July 2021. Meanwhile, the growth rate of production costs was the second largest in the history of the study (since 1998). In addition to rising commodity prices, firms also reported higher energy prices and wages. However, despite rising inflationary pressures, supply chain disruptions and the war in Ukraine, business optimism for the coming year has improved somewhat, although it remains significantly more gloomy than at the beginning of the year.