By Ed Frankl


Business activity in the eurozone grew at its fastest rate in almost a year in April, helped by a resilient services sector that is driving the bloc's recovery, a monthly survey said Monday.

The HCOB Eurozone Composite PMI Output Index--a gauge of activity in the services and manufacturing sectors--rose to 51.7 in April from 50.3 in March, taking the gauge further above the 50 level that indicates expansion. That marks an 11-month high, and slightly better than a preliminary reading of 51.4 published in late April.

"These trends suggest a growing optimism among service providers, a sentiment further bolstered by business expectations, which are currently at much higher levels compared to the average of the past two years," Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said.

Stronger demand was a key reason for the sharper upturn in services output, with increased sales supporting business activity and new orders rising for the first time since May last year, the data said.

But as the services sector continues to accelerate, expanding for the third-straight month, struggling manufacturing production continued to decline.

The eurozone's two largest nations, Germany and France, saw overall levels of economic activity rise for the first time in ten and 11 months respectively, albeit only marginally. Spain, meanwhile, outperformed, capitalizing disproportionately on tourism despite recent political turmoil, de la Rubia said.

However, there were more prominent inflationary pressures in April, the survey said, as increases in both input costs and output charges accelerated.

Operating costs in the services sector, which include labor costs, have rapidly increased over the past 12 months, meaning the European Central Bank will likely proceed cautiously with rate cuts, de la Rubia added.

Data published last week showed the eurozone economy grew 0.3% in the first three months of 2024, the strongest performance since the third quarter of 2022. While indicative of improving momentum, it still lags behind performance in the U.S.


Write to Ed Frankl at edward.frankl@wsj.com


(END) Dow Jones Newswires

05-06-24 0810ET