Euro zone business activity grows at fastest pace in almost a year, PMI shows

Euro zone business activity expanded at its fastest pace in almost a year last month as a resurgence in the bloc’s dominant services industry more than offset a deeper downturn in manufacturing, a survey showed on Monday.

HCOB’s composite Purchasing Managers’ Index (PMI) for the currency union, compiled by S&P Global and seen as a good gauge of overall economic health, bounced to 51.7 in April from March’s 50.3, surpassing a preliminary 51.4 estimate.

That was its second month above the 50 mark separating growth from contraction and the highest since May last year.

“Service providers have now expanded their activity for the third consecutive month, putting an end to the lack of dynamism observed in the second half of last year,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

The services PMI leapt to 53.3 from 51.5, above the flash estimate of 52.9 and its highest reading since last May.

A sister survey released last week showed factory activity in the euro zone took a turn for the worse in April, highlighting the divergence between the two sectors.

Overall optimism about the year ahead remained buoyant. The composite future output index dipped only slightly from March’s 61.6 – its highest since February 2022 – to 61.6.

Suggesting services firms expect the rebound to continue they increased headcount at the fastest pace in almost a year, with the employment index climbing to 53.5 from 52.3.

“Encouragingly, employment has increased at a faster rate, aligning with the uptick in new business and the growth of the order book, which has seen its strongest expansion in eleven months,” de la Rubia added.