(Il Sole 24 Ore Radiocor) - Milano, 23 apr - In April, the eurozone's purchasing managers' index for the manufacturing sector jumped to a 47-month high of 52.2 from 51.6 in March while the index for the services sector tumbled to a 62-month low of 47.4 from 50.2 the previous month, according to preliminary data released by S&P Global.

The manufacturing output PMI rose to an eight-month high of 52.2 from 52.0 in March while the composite PMI, a weighted average of manufacturing output and services PMI, fell to a 17-month low of 48.6, down from 50.7.

A reading above 50 signals sector expansion while one below a contraction.

'The eurozone is facing deepening economic woes from the war in the Middle East, presenting a major headache for policymakers," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"The conflict has pushed the economy into decline in April, while driving inflation sharply higher. Increasingly widespread supply shortages meanwhile threaten to dampen growth further while adding more upward pressure to prices in the coming weeks.

'April's flash PMI has moved into contraction territory for the first time since late 2024, signalling a 0.1% quarterly rate of GDP decline after a 0.2% gain had been signalled for the first quarter. The war is currently hitting the service sector hardest, where business activity is falling at a rate not seen since the pandemic lockdowns of early 2021. However, the sustained growth of manufacturing meanwhile seen in April comes with something of a sting in the tail, as demand for goods is being buoyed by stock building as companies scramble to secure purchases ahead of further price hikes or supply shortages. Manufacturers have increased their buying of inputs to a degree not witnessed since early 2022 as supply chain delays have also risen to the most widespread since the pandemic.

'Input costs and selling prices have already jumped higher not just in response to higher energy costs but in a reflection of a broader upturn in commodity prices and mis-match of demand against constrained supply. If the Covid-19 pandemic is excluded, this is the biggest surge in cost pressures that we have recorded since 2000.

'Not surprisingly, businesses are taking an increasingly gloomy view of the outlook, with sentiment now down to its lowest since late 2022.

'In this environment, the ECB once again has the unenviable task of deciding whether to raise interest rates in the face of the worrying inflation picture, or whether this price spike will prove temporary and its focus should instead be on the need to prevent the economy sliding into a deeper downturn. While postponing any decision could make either scenario worse, it would be understandable to see rate setters sit on their hands and await more clarity on the situation, both in terms of the conflict and the assessment.

of the eurozone's economic health.'

(RADIOCOR) 23-04-26 10:24:59 (0289) 5 NNNN