The euro area economy is accelerating as inflation concerns mount


Economic momentum in the euro area unexpectedly picked up in April, with a rebound in services following the end of Covid restrictions offsetting the halt in production.

The composite gauge for both sectors jumped to a seventh-month high, according to a survey of purchasing managers released by S&P Global. Rise to 55.8 from 54.9 in March versus 53.9 estimate.

The improvement in services has been led by an unprecedented surge in tourism and leisure activity, while manufacturing output has grown at a slower pace in almost two years.

“April saw a two-tier economy in the eurozone,” said Chris Williamson, chief economist at S&P Global, on Friday. “Weakness in manufacturing is a big concern as it points to an economy that is not in full swing.”

The outlook for the euro area economy is becoming increasingly uncertain as Russia’s invasion of Ukraine weighs on the region’s pandemic recovery.

Renewed tight lockdowns in China have exacerbated global shortages which – along with rising energy costs – are fueling inflation, which has already reached record levels.

Prices of goods and services rose at an “unprecedented pace” this month, according to S&P Global, suggesting inflation needs to keep rising.

“The ever-rising cost of living suggests that service sector growth could slow sharply once the initial recovery from the opening up of the economy fades,” Williamson said. The euro area economy is accelerating as inflation concerns mount

Fry Electronics Team

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