Eurozone Manufacturing Activity Shrinks At Slower Pace

(RTTNews) - Euro area factory activity contracted at a slower pace in April as production grew at the fastest pace in more than three years, final data of the purchasing managers' survey by S&P Global showed Friday.

The HCOB manufacturing Purchasing Managers' Index rose to a 32-month high of 49.0 in April from 48.6 in March. The score was also above the flash estimate of 48.7.

"A fourth consecutive increase in the HCOB PMI can be seen as a sign that the situation in the manufacturing sector is stabilizing," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"Industrial activity remains highly exposed to US tariff policy, but the planned sharp increase in defence spending in the EU could help stabilize the situation in the long term," de la Rubia added.

Manufacturing production grew the most in just over three years in April. New orders shrunk slightly in April as export demand, which was the main drag on sales, fell the least since April 2022.

Purchasing activity dropped further, as did stocks of pre-and post-production items. Meanwhile, firms' expectations for growth eased with confidence falling to its lowest in the year-to-date period.

Meanwhile, manufacturers reduced their headcounts further in April though the rate of decline was the softest in ten months.

Backlog reductions were still possible despite sustained workforce cuts. The pace at which outstanding orders were cleared even quickened to its sharpest for three months, the survey showed.

On the price front, the survey revealed that input costs dropped for the first time since last November. However, prices charged for goods were aggressively raised at the fastest pace in two years.

Among the big-four economies, Germany, France and Italy posted softer reductions in factory activity than in March. Meanwhile, Spain registered a quicker decline in April.

German manufacturing contracted at the slowest pace in more than two-and-a-half years in April. The HCOB final factory PMI registered 48.4, up from March's 48.3 and above the flash reading of 48.0.

France's manufacturing sector displayed tentative signs of a recovery in April. The HCOB final PMI edged up to 48.7 from 48.5 in March and also above the flash estimate of 48.2. The pace of deterioration was the slowest in over two years. Italy's manufacturing downturn was less severe than earlier in the year. The factory PMI climbed more-than-expected to 49.3 in April from 46.6 in the previous month. The reading was seen at 47.1. The score signaled the softest fall in operating conditions in eight months.

The downturn in Spain's manufacturing economy continued in April. The HCOB factory PMI declined unexpectedly to 48.1 in April from 49.5 in March. The score was forecast to rise to 50.0.