Eurozone factory activity declined further in April, according to PMI data

The recent report on eurozone manufacturing activity presents a mixed scenario, with overall conditions declining despite some areas showing signs of improvement.

In April, manufacturing activity across the eurozone decreased further due to softening demand, even though factories cut prices to boost sales. This downturn prompted an 11th consecutive month of workforce reduction.

Conditions worsened in France and Italy, while Germany showed progress towards expansion. Spain experienced its fastest pace of manufacturing growth in nearly two years, driven by higher demand.

The Eurozone Purchasing Managers’ Index (PMI) for manufacturing fell to 45.7 in April, staying below the 50 threshold that signals contraction for almost two years. Although the output index edged up slightly, the new orders index dropped to a four-month low, indicating a slow recovery for manufacturers.

Despite price reductions, manufacturing challenges persist, suggesting the European Central Bank might consider lowering borrowing costs in June as inflation subsides. Eurozone inflation stayed steady at 2.4% in April, but there are signs of decreasing underlying price pressures.

Overall, while certain regions like Germany and Spain offer glimmers of hope, the eurozone’s manufacturing sector continues to struggle with weakening demand and persistent economic uncertainties.