- Eurozone Final April Manufacturing PMI 45.7 vs. 45.6 expected and 46.1 prior.
Key findings:
- HCOB Eurozone Manufacturing PMI at 45.7 (Mar: 46.1). 4-month low.
- HCOB Eurozone Manufacturing PMI Output Index at 47.3 (Mar: 47.1). 12-month high.
- Factory production falls at slowest pace in a year and confidence rises, but new order decline quickens
Comment:
“What is going to rescue the Eurozone economy? While this is a difficult question, one thing is clear: It’s not the manufacturing sector. Instead, this sector is prolonging its drawn out recession into April. Output shrank at a similar pace as in the months before and companies have reduced their purchases at an accelerated rate. Compounding the issue, there is no sign of a turnaround in the inventory cycle, but instead we saw a sustained trend of depleting stockpiles of both purchased and final goods in April.
“A plethora of evidence highlights the stark absence of demand, as evidenced by a rapid decline in new orders, unmatched in speed over the past four months and devoid of international support. Consequently, backlogs of work dwindled further. Concurrently, expedited delivery schedules by suppliers in April and over the preceding few months reveal abundant logistical capacity, a testament to the dearth of orders. This comprehensive snapshot portends a postponement of any semblance of recovery, likely extending well into the summer.
“A recovery often starts with some positive momentum in the capital goods sector. Instead, and in a worrying sign, capital goods have been hit particularly hard in April as demand for these goods fell at an accelerated pace in the top three euro countries. Of particular concern is Germany, the industrial powerhouse, grappling with a pervasive downturn spanning key sectors including capital goods, intermediate goods, and consumer goods.
“Spain's economic pulse diverges from the Eurozone's rhythm. This is evidenced by the sustained growth of its manufacturing sector for the third successive month, with April showcasing a noteworthy expansion. This positive momentum starkly contrasts with the subdued outcomes witnessed in Germany, France, and Italy. Bolstered by a favourable global landscape, there is anticipation that this disparity will gradually narrow in the coming months.”
