The headline reading is a 32-month high while the output index also improved to 51.5, up from 50.5 in March, and that's a 37-month high. It's a positive sign to start Q2 as the euro area industry looks to stabilise, helped by meaningful improvements in France and Germany in particular. That said, the path ahead remains uncertain; not least with US tariffs still clouding the outlook. HCOB notes that:
“A fourth consecutive increase in the HCOB PMI can be seen as a sign that the situation in the manufacturing sector is stabilising. This comes as a surprise given the many uncertainties and shocks of recent months. However, the situation remains fragile, as evidenced by the fact that the headline index remains below the threshold value of 50. Industrial activity remains highly exposed to US tariff policy, but the planned sharp increase in defence spending in the EU could help stabilise the situation in the long term. This is confirmed by the survey’s optimism gauge, which is relatively elevated when compared with the trend over the past three years.
“The near stabilisation of the industrial economy was helped by a production pick-up in both Germany and France in April, and Italy is fighting its way back into expansion territory. This may have been spurred by the fall in oil and gas prices in April, and this was underscored by a decline in input prices, which had risen in each of the three months prior. Interest rate cuts by the ECB and the prospect of further monetary easing are also likely to have been welcome news for companies.
“Manufacturers were clearly able to expand their profit margins in April, as purchasing prices fell while selling prices rose at their fastest pace in two years. This is unlikely to continue, however, as US tariff policy is likely to see Chinese goods being offered more widely in the EU, intensifying competition.”
This article was written by Justin Low at www.forexlive.com. Read More Details
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