Growth in the eurozone services sector slowed slightly this month but factories ramped up production as prices rose at the fastest monthly rate in three years, business surveys showed on Tuesday. The April Purchasing Managers Indexes from Markit also highlighted that business activity in Germany and France continued to outpace the rest of the 17-member common currency bloc.
"The flash eurozone PMI for April confirms that economic activity in the region as a whole is still defying the continued problems in the periphery," said Jonathan Loynes at Capital Economics. Portugal became the latest eurozone member to ask for a bailout this month, following Greece and Ireland, as periphery economies face weak domestic demand, hampered by austerity measures and political uncertainty.
ECB President Jean-Claude Trichet said on Tuesday he does not see alarming signs of second-round inflationary effects, and a Reuters poll last week predicted the ECB would follow a steady path of raising rates. The service sector output price index rose to its highest since 2008, up nearly a full point to 53.2 even as the pace of input price rises for manufacturers moderated.
That sub-index fell to 79.6 from 82.2, though this was still the third-highest reading in the survey's 14-year history, exceeded only by those in the prior two months. Official eurozone data showed inflation rose to 2.7 percent in March, considerably above the ECB's 2 percent target ceiling. The Flash Markit Eurozone Services Purchasing Managers' Index slipped to 56.9 in April from the previous month's near four-year high of 57.2, in line with consensus.
The flash manufacturing PMI rose to 57.7 from 57.5 in March, confounding consensus expectations in a Reuters poll for a fall to 57.0, while the output index bounced to 60.0 from 58.5. The eurozone composite PMI, a broader measure of the private sector which combines the services and manufacturing data, nudged up to 57.8 from March's 57.6, beating forecasts for a fall to 57.1.
Hiring accelerated this month to its strongest pace since November 2007, the PMI showed, with the composite employment index rising to 53.6 from 53.1. Unemployment in the eurozone dipped to 9.9 percent in February after holding steady at 10 percent in January.
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