The first estimate of euro zone manufacturing PMI showed a slight rebound in April after falling significantly in the month before. Manufacturing PMI rose from 57.5 to 57.7, while the consensus was looking for a second consecutive drop (to 57.0). Strength in the manufacturing sector was again led by the two biggest EMU economies where the manufacturing PMI’s increased further: Germany (61.7 from 60.9) and France (56.9 from 55.4), suggesting that business sentiment in the non-core countries weakened further. Services PMI weakened slightly in April, from its highest level since August 2007 in March. The headline index fell from 57.2 to 56.9, perfectly in line with expectations. In France however, the services sector continued to flourish (63.4 from 60.4) as services PMI jumped to the highest level since September 2000, while German services PMI fell from 60.1 to 57.7. In the services sector, expectations slipped to a six-month low, suggesting that the pace of expansion might slow further in the coming months. The overall composite PMI rose from 57.6 to 57.8, indicating that the euro zone economy continues to expand at a strong pace, but the upturn remains dependent upon the two biggest EMU countries, while growth is limited by the peripheral countries. Employment rose at the fastest pace since November 2007, while prices charged accelerated to a pace just below the all-time high, reached in July 2008.
European Commission’s consumer confidence weakened slightly more than expected in April, according to the first estimate. In April, EC’s consumer confidence fell from -10.6 to -11.4, while a decline to -11.0 was forecasted. Consumer sentiment weakened for a second straight month in April. Several reasons might have deteriorated sentiment including the sharply rising energy and commodity prices, while also the bailout for Portugal and earthquake in Japan might have had an impact.