3 min
April PMIs report the fastest expansion in nearly a year. However, inflationary pressures are increasing. For analysts, the first cut is obvious, but subsequent moves become more complicated
The second quarter is off to a good start for the Eurozone economy. According to the investigation SMEs of April, the bloc’s activity posted its fastest growth in nearly a year, hinting at an exit from the recent contraction. However the data is not completely positive and beyond reporting yet strong sectoral divergences, with the services sector in good shape and manufacturing continuing to decline, also indicate a new increase in pressure on prices. For analysts, the April numbers do not call into question the rate cut expected in June, but they risk making the ECB more cautious on subsequent moves. The same vice president of Eurotower, Luis de Guindosdefined the summer cut as a “fait accompli” (barring surprises), but held back on subsequent interventions.
