Eurozone economic growth hits three-year high in April, France slows

06 May 2014 13:02 Source:ICIS News

LONDON (ICIS)--Eurozone manufacturing and service sector growth gathered pace in April to hit a three-year high with output expanding across many of the bloc’s key economies, but growth in France sputtered to a near-halt, analyst Markit said on Tuesday.

Composite purchasing managers’ index (PMI) data for the region showed a final eurozone output growth score for the month at 54.0, up from 53.1 the previous month, with the outlook strong for the next month on the back of new orders, rising employment and growing order backlogs, Markit said. PMI figures of above 50.0 indicate growth.

The month saw spikes in growth for several recovering economies, with Ireland generating all-sector output growth of 60.8, its highest level in nearly eight years, while Spain recorded an 85-month high of 56.3, Markit added.

Germany’s final April PMI figure for the month stood at 56.1, a two-month high, thanks to strengthening order books and rising employment levels. Italy’s all-sector PMI for the month rose to 52.6, another two-month high.

France’s uneasy recovery came close to stalling in April with an all-sector PMI of 50.6 its lowest for two months, representing “near stagnant output growth”, according to Markit, which it attributed to ongoing domestic market weakness.

“The eurozone started the second quarter with the fastest growth seen for three years. At this rate we can expect GDP to rise by at least 0.5% in the second quarter," said Markit chief economist Chris Williamson.

“The most exciting news is the strong upturns that are becoming apparent in Spain and Ireland... Italy’s recovery is meanwhile also gaining momentum, with the pace of growth rising to one of the fastest seen over the past three years,” he added.

The growth momentum displayed by the region over the last few months reduces the possibility of the European Central Bank cutting interest rates further or pursuing further stimulus measures, despite fears of economic deflation.

Outside the eurozone, service sector data for the UK in April showed a PMI of 58.7 compared to 57.6 in March, the sharpest increase in activity this year and representing the 16th consecutive month that growth has been recorded, Markit said.

By Tom Brown