April 21 (Reuters) - The euro zone economic recovery has
unexpectedly gathered pace this month as the bloc's dominant
services industry saw already buoyant demand rise, more than
offsetting a deepening downturn in manufacturing, surveys
showed.
HCOB's flash Composite Purchasing Managers' Index (PMI),
compiled by S&P Global and seen as a good gauge of overall
economic health, jumped to an 11-month high of 54.4 in April
from March's 53.7, data showed on Friday.
That was well above the 50 mark separating growth from
contraction and matched the highest forecast in a Reuters poll
which had predicted no change from March.
"The HCOB Purchasing Managers' Indices for the euro zone
show a very friendly overall picture of an economy that
continues to recover," Cyrus de la Rubia, chief economist at
Hamburg Commercial Bank.
"However, a closer look reveals that growth is very unevenly
distributed. For example, the gap between the partly booming
services sector on the one hand and the weakening manufacturing
sector on the other has widened further."
To meet rising demand firms increased headcount at the
fastest pace since last May. The employment index bounced to
54.7 in April from 53.3.
A PMI covering the services industry soared to 56.6 this
month from 55.0, confounding expectations in the Reuters poll
for a decline to 54.5.
Despite high living costs in the region, demand for services
improved as consumers continued to spend. The new business index
rose to a one-year high of 55.8 from 54.2.
But it was a different story for the bloc's manufacturers
who saw demand decline faster. The sector's headline PMI fell to
45.5 from 47.3, its lowest since the coronavirus pandemic was
cementing its grip on the world three years ago.
An index measuring output, which feeds into the composite
PMI and had spent two months in positive territory, fell to 48.5
from 50.4.
Still, further improvements to supply chains meant the cost
of raw materials fell at the sharpest pace in almost three
years, so factories only marginally increased their charges. The
output prices index dropped to 51.8 from 53.4, its lowest since
late-2020.
That will likely be welcomed by policymakers at the European
Central Bank who have struggled to get inflation anywhere near
their 2% target.
The ECB is expected to raise rates for a seventh straight
meeting on May 4, with policymakers converging on a
25-basis-point hike even if a larger move is not yet off the
table, sources with direct knowledge of the discussions have
told Reuters.
(Reporting by Jonathan Cable; Editing by Hugh Lawson)
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