No euphoria among Euroland purchasing managers

A zestful start to the second quarter does not look like this. The all-in Composite purchasing manager index for Euroland slipped slightly in April from 51.6 to 51.3 index points. The sentiment yardstick for the service sector lost a little ground, while its counterpart for manufacturing rose by 0.3 points but remained below the growth threshold at 47.8 points.

Service providers in Germany and France were more upbeat, while manufacturing still has to contend with demand issues, which dampens optimism. According to the purchasing managers polled, the reservations relate mainly to the increasing political uncertainty surrounding Brexit, trade wars and protectionism. The automotive industry was once more often mentioned as a problem sector. On balance, nothing changed in April when it came to the factors squeezing the European private sector. On the basis of the survey indicators released to date, there are thus no grounds to expect that economic growth in the Eurozone will have picked up, especially as in the rest of the EMU the sentiment has of late probably tended worse than in France and Germany.

At the beginning of Q2 2019, sentiment among German purchasing managers remained divided. The sentiment barometer for the service sector improved for the fourth consecutive time and is well above the expansion threshold of 50 index points. Here, robust domestic demand is driving things. In manufacturing, things remain dim, as sentiment, although now up at 44.5 from 44.1 index points the prior month, remains more than dampened.

In France, sentiment in the private sector has improved slightly after the weak prior months. The Composite PMI rose by 1.1 points and now reads 50 points or bang on the growth threshold. This is due to the service sector, where the figures headed back into growth territory. The manufacturing index by contrast remained lodged beneath the growth mark. Here, too, weak demand for exports has fuelled concern.

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