The latest HCOB PMI survey data, compiled by S&P Global, revealed a sustained upturn in private sector business activity across the currency union since the beginning of the year, but the trend remained subdued and well below its long-term average.

Soft demand conditions continued to limit the speed of growth, leaving companies to rely on backlogs of work as a means to drive output higher. Nevertheless, employment ticked up for a second consecutive month. There was a marked drop in business confidence, however, with year-ahead expectations slipping to an 18month low.

In terms of pricing trends, April survey data indicated a further cooling in the rates of both input cost and output charge inflation.

The seasonally adjusted HCOB Eurozone Composite PMI Output Index recorded above the 50.0 no-change mark for a fourth successive month in April, but it remained close to the threshold signalling a weak rate of expansion. Moreover, having fallen from 50.9 in March to 50.4, the latest reading of the headline index pointed to an increase in business activity that was softer on the month and only marginal overall.

April’s upturn was almost entirely underpinned by the manufacturing sector, where output rose at its fastest rate since March 2022. By comparison, there was a near-stagnation of activity in the services industry after four months of mild expansion.

The HCOB Eurozone Services PMI Business Activity Index signalled a near-stagnation of the service sector in April. Falling from 51.0 in March to 50.1, the index was only just above the neutral 50.0 threshold, posting below its average seen in the opening quarter of the year (51.0).

A third successive monthly drop in the level of incoming new work was registered during April. The rate of decrease in new orders was the quickest since last November, albeit mild overall.

A marginal reduction in new export business was also posted. Eurozone services companies made additional inroads into their incomplete business during the latest survey period, extending the depletion trend to exactly a year. That said, despite evidence of reduced capacity pressures, employment rose at a modest rate. Input costs increased at a sharp pace in April, although the rate of inflation cooled to a five-month low.

Prices charged for the provision of euro area services meanwhile rose at the weakest pace since October 2024. Lastly, there was another deterioration in business confidence, marking a fourth straight month of easing expectations. The level of positive sentiment dipped to its lowest in almost two-and-a-half years.