Eurozone manufacturing sentiment improves

How is the manufacturing purchasing managers’ index developing in the eurozone?

Sentiment among manufacturing companies in the eurozone improved in April for the fourth month in a row. The manufacturing purchasing managers’ index from S&P Global rose by 0.6 points to 52.2 points, the company reported on Monday in London following a second estimate.

This confirmed the initial estimate, as expected on average by analysts. At the same time, the indicator reached its highest level in almost four years. The value remains above the growth threshold of 50 points. This points to an increase in economic activity in the manufacturing sector.

The development is particularly remarkable because companies continue to face high oil prices. The background is the oil price shock resulting from the war with Iran.

Germany and France are developing differently

In the two largest economies of the eurozone, there was no uniform picture in April. In France, the indicator rose significantly and clearly moved away from the expansion threshold on the upside.

In Germany, by contrast, the corresponding value slipped slightly again after three consecutive increases. However, the decline was not quite as pronounced as initially indicated in the first estimate. In addition, the German manufacturing indicator remained above the threshold of 50 points.

Why Italy and Spain are supporting the picture

Other important countries in the eurozone also showed positive developments. In Italy, sentiment among industrial companies improved unexpectedly sharply. It was already the fourth increase in a row there.

In Spain, sentiment brightened more than expected after weakening in March. The corresponding index also climbed clearly above the expansion threshold. This means Italy and Spain provide additional indications of more robust industrial activity within the eurozone.

Why S&P Global remains skeptical despite a four-year high

For the eurozone as a whole, however, the assessment by S&P Global analyst Chris Williamson is cautious. Despite the highest level in almost four years, he does not see an unambiguously positive result in the survey data.

Williamson explained: "Although the indicator has risen to its highest level in almost four years, the survey is more a cause for concern than for celebration."

In his assessment, production and incoming orders are being supported by the build-up of safety stocks. This inventory build-up is due to widespread concerns about supply bottlenecks and rising prices as a result of the war in the Middle East.

This leaves the improved industrial sentiment in the eurozone as a mixed picture: The manufacturing purchasing managers' index does signal growth, but part of the momentum apparently reflects precautionary measures by companies.

With material from dpa