Eurozone 'is on the brink of a startling recovery'

A second set of figures in as many days indicates the euro area is bouncing back stronger than expected 

April showed a marked improvement in eurozone economic conditions and consumer confidence.

The eurozone's recovery from its pandemic-induced economic downturn was much stronger than expected in April as the service industry adapted to lockdowns and made a surprise return to growth, a survey showed.

With the continent facing a fresh wave of coronavirus infections, governments have reimposed strict curbs to contain the spread, forcing some businesses to close and encouraging citizens to stay home.

That meant the economy was expected to recover at a much weaker rate this quarter than had been expected only a month previously.

Surge in key economic health index 

However, IHS Markit's flash Composite Purchasing Managers' Index, seen as a good guide to economic health, rose to a nine-month high of 53.7 from March's 53.2, confounding expectations for a dip to 52.8. Anything above 50 indicates growth.

"The eurozone economy looks like it's on the brink of a startling recovery," said Bert Colijn at ING. 
"Only months ago it seemed to be rapidly turning into the weak link among advanced markets, being slow out the gates with vaccinations, seeing lockdowns extended and having weaker fiscal support."

True, first-quarter GDP growth figures are set to still show declines, but the April PMI adds to a lot of encouraging underlying numbers. 

On Thursday, the ECB kept its copious stimulus flowing to support the economy as president Christine Lagarde said there were clear signs of improvement.

"Progress with vaccination campaigns and an envisaged gradual relaxation of containment measures underpin expectations of a firm rebound in economic activity in the course of 2021," she said.

Eurozone consumer confidence up

Eurozone consumer confidence rose 2.7 points in April from March, European Commission figures on Thursday showed.

With some businesses staying open — or preparing to reopen — services firms increased headcount at the fastest pace since before Europe faced the full brunt of the pandemic.

Meanwhile, UK retail sales jumped last month before a partial lifting of coronavirus restrictions, suggesting an economic rebound is under way in the UK also, but official data also showed record peacetime government borrowing.

The UK's government borrowed £303.1bn (€252bn) in the 2020/21 financial year, which ended last month, a surge of £246bn on the previous year.

Borrowing stood at 14.5% of economic output, the highest such ratio since 1946. Britain's public debt stood at £2.14 trillion, almost 98% of GDP.

• Reuters