Eurozone April final services PMI 57.7 vs 57.7 prelim

• Composite PMI 55.8 vs 55.8 prelim

The services reading is an 8-month high with the composite reading also moving up to a 7-month high as business activity improved overall with the help of better demand conditions brought about by fewer COVID-19 restrictions. That said, there are some worrying signs as new export orders fell for a second straight month and business confidence still rather fragile as rising inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term pressures and geopolitical tensions weighed on sentiment.

Looking at the details, input costs rose at the second-sharpest rate in the survey's history and euro area businesses raised their prices charged to the greatest extent on record in order to protect margins. S&P Global notes that:

“The eurozone economy has shown surprising resilience in the face of the Ukraine-Russia war, thanks to a renewed burst of service sector activity as virus containment measures were relaxed further during April. The survey data are consistent with GDP rising at a quarterly rate of around 0.7% at the start of the second quarter after signalling a 0.4% rise in the first quarter.

“Unfortunately the acceleration of output growth seen during the month was accompanied by a further surge in costs, which fed through to a record rise in average prices charged for goods and services. “The combination of the stronger growth profile for the second quarter and a persistent acceleration of inflation signalled by the surveys will add to speculation that the ECB could start raising intertest rates as soon as its July meeting.

“However, downside growth risks have increased, meaning policymakers could take a more cautious approach to tightening policy. Manufacturing growth has almost stalled, led by falling production in Germany, due to the new supply chain shocks and uncertainty caused by Russia’s invasion of Ukraine. It also remains unclear as to whether the service sector can sustain its current growth once the initial rebound from the reopening of the economy fades, especially given the soaring cost of living. Hopes of the economy being buoyed by pent-up demand may be confounded if spending power is eroded by inflation and risk aversion sets in, encouraging saving. The data flow as we head into the summer will therefore likely prove pivotal to policymakers in their assessment of whether the eurozone’s economic resilience can prove enduring.”