Eurozone businesses make strong start to Q2

Eurozone businesses started the second quarter with healthy growth as a buoyant order book again encouraged them to hire more, a survey showed.

Any sign that the bloc’s recovery is gaining traction will be welcomed by the European Central Bank, which embarked on a €1tn bond buying stimulus programme in March, although the survey did show firms were still cutting prices.

Markit’s final composite Purchasing Managers’ Index, seen as a good guide to growth, was 53.9 in April, ahead of an earlier flash reading of 53.5 but just behind March’s 11-month high of 54.0. A reading above 50 implies growth.

“The fact that the rate of growth failed to gain further momentum is a disappointment, but the national growth variations will give policymakers some real encouragement that the economic health of the region is improving,” said Chris Williamson, Markit’s chief economist.

The PMIs suggest quarter-on-quarter growth of 0.4% for April-June, Mr Williamson said, which would match forecasts for first-quarter growth.

But to drive that growth, firms cut prices again — albeit less sharply in April.

The composite output price index, which rose to 49.2 from 48.9, has now been below 50 for three years.

Reuters