Eurozone economic activity hit a fresh six-year high this month, according to a preliminary estimate from IHS Markit, following a surge in activity in France that suggests the region's election risks are not holding back broader sentiment.
IHS Markit Economics' composite PMI reading of Eurozone growth rose to 56.7 in April, up from 56.4 in March and the highest tally in six years. Readings above 50 generally indicated economic growth. Markit's measure of manufacturing activity rose to 58.0, a 72-month high (up from 57.5 in March) while the pace of activity in the services sector jumped to 56.2 from a previous reading of 56.0. The figures indicate first quarter GDP growth of around 0.7%, Markit said, that could lead to upward revisions in full-year growth forecasts.
"France's elections pose the highest near-term risk to the outlook, but in the lead-up to the vote the business mood has clearly been buoyant," IHS Markit chief economist Chris Williamson said. "Growth in France has risen above that seen in Germany amid rising optimism about the future. Both countries are enjoying their best growth spells for six years, while elsewhere in the region the pace of expansion has accelerated to a near ten-year high, cementing the increasingly broad-based nature of the upturn."
The European single currency extended modest gains against the U.S. dollar following the release, rising to 1.0722, but the advance was somewhat tempered by slower readings from Germany, the region's largest economy, after Markit's composite indicator showed activity hit a two-month low of 56.3.
"Although manufacturing continued its run of impressive growth in April, a closer look at the latest services data suggests that overall expansion may continue to ease in the coming months," economist Trevor Balchin said. "Moreover, outstanding business at service providers fell for the first time in three months and firms were the least optimistic since last November."