The euro zone service sector growth rebounded marginally in April while price pressures surged and manufacturing activity fell to a near three-year low, a major survey showed today.
In signs that the global slowdown and euro strength are beginning to hurt the euro zone economy, the manufacturing survey showed both new orders and new export orders shrinking for the first time since May 2005.
The RBC/NTC Eurozone Purchasing Managers Index for the region's services companies, ranging from banks and airlines to cafes, rose to 51.8 in April, up from 51.6 in March and beating expectations of a mild dip to 51.4.
However, the manufacturing sector PMI fell closer to the 50 divide between growth and contraction. It dropped to 50.8 in April, from 52.0 in March, its lowest since August 2005 as new orders fell into contraction territory.
The euro and financial markets managed to shrug off the data.
Earlier flash data indicated that growth in France fell sharply across both sectors, compared with a fall in German manufacturing activity and a sharp jump higher in its service economy.
The data chimed with the release of French data showing consumer spending fell by 1.7 per cent in March, far more than expected.
Manufacturing growth slowed as costs rose across the private sector economy, a now familiar picture for the European Central Bank which has kept its benchmark rate on hold at 4 per cent while other central banks have cut in an attempt to mitigate risks to world growth.
"The aggregate picture is a little more stable than the market was expecting. The weakness in the manufacturing sector is in the orders numbers - there is the suggestion there is more softness to come," said Mark Wall at Deutsche Bank.
The gauge of input prices in the services sector jumped to 63.8 in April, up from 63.2 the previous month and hitting its highest level since October 2000. Companies reported higher energy and fuel costs over the month.
They found it a little easier to pass on higher costs. The prices charged index rose to 54.2 from 53.9, its highest since April 2007.