The euro area’s top two economies surged again at the start of the second quarter, with private-sector output jumping to the highest in around a year on the back of thriving services.
(Bloomberg) — The euro area’s top two economies surged again at the start of the second quarter, with private-sector output jumping to the highest in around a year on the back of thriving services.
The HCOB Flash Purchasing Managers’ Index for France rose to 53.8 in April from 52.7 a month earlier, a much bigger increase than economists predicted. This was driven by services, while manufacturing slumped in part as a result of protests against President Emmanuel Macron’s unpopular pension reform.
French factory production fell at the steepest pace in just shy of three years, with firms citing subdued demand sometimes linked to the nationwide strikes.
While the unrest is leaving a “visible mark” on manufacturing output, “surprisingly, no traces of the protests are visible in the services sector,” said Norman Liebke, an economist at Hamburg Commercial Bank. “The positive performance of the French economy is entirely due to the services sector.”
In Germany, flash PMIs increased to 53.9 from 52.6. This also beat the median forecast of economists and was solely due to the services sector, where optimism about the outlook is reflected in a willingness to speed up hiring.
Still, German manufacturers have been able to increase selling prices again while input prices have fallen more quickly, boosting profit margins.
The data come just a week before first-quarter gross domestic product figures are likely to reveal a German recession, while France managed to eek out growth of 0.1%, matching the final three months of last year. Analysts predict growth in both economies for the remainder of the year.
PMI readings for the euro area, UK and US later on Friday are all predicted to show expansion.
Data earlier revealed activity in Japan slowed slightly while remaining strong. The gauge for Australia showed a return to growth.
–With assistance from Joel Rinneby and Mark Evans.
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