Market Analysis

In April, a survey revealed that the downturn in euro zone manufacturing persisted, driven by weakening demand despite factories lowering prices. 

The final euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, dropped to 45.7 from March's 46.1, marking the 22nd consecutive month below the growth threshold of 50. Although slightly higher than the preliminary estimate of 45.6, the index still pointed to a challenging environment.

Output, a crucial indicator of economic health, edged up from 47.1 in March to 47.3, aligning with the earlier estimate. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, highlighted the prolonged recession in the manufacturing sector, emphasizing its limited contribution to the euro zone's economic recovery.

Despite the bloc's economy showing signs of improvement in the last quarter, with a 0.3% expansion in January-March, the manufacturing sector faced ongoing challenges. New orders, persistently below 50 since May 2022, hit a four-month low at 44.1, indicating a further slowdown.

Manufacturers continued to deplete their inventories and reduce their workforce for the eleventh consecutive month. Despite efforts to stimulate demand by lowering prices, evidence suggested that the European Central Bank would likely lower borrowing costs in June to combat easing inflation.

Euro zone inflation remained stable at 2.4% in April, in line with expectations, although an essential indicator of underlying price pressures slowed, according to recent data.

Paraphrasing text from "Reuters" all rights reserved by the original author.