Eurozone’s PMI dips despite price-cutting moves by ECB
Print Edition
FURTHER price-cutting failed to halt a slowdown in eurozone business growth this month, a survey showed, disappointing the European Central Bank which wants inflation to rise.
The ECB’s swathes of cheap loans and interest rate cuts, alongside a top-up to its monthly bond purchases, appear to have had little effect on inflation or private-sector growth.
Markit’s Composite Flash Purchasing Managers’ Index for the eurozone, based on surveys of thousands of companies and seen as a good guide to growth, dipped to 53 from March’s 53.1, matching a 13-month low in February.
A Reuters poll had predicted a rise to 53.2. A reading above 50 denotes growth in activity.
“April’s small fall in the eurozone Composite PMI adds to the evidence that the region’s recovery is slowing,” said Jack Allen, European economist at Capital Economics.
“Overall, the survey suggests that the eurozone’s economic recovery is still too slow to generate much upward pressure on inflation. We think that the ECB will eventually need to do more to boost growth and inflation.”
The ECB has been easing policy, cutting rates deeper into negative territory and expanding purchases in a bid to prop up inflation. The ECB will begin buying corporate bonds in the second half of this year.
ECB President Mario Draghi left policy unchanged on Thursday as the bank waits to see how the two stimulus packages announced since December play out but hinted further easing could come.
Consumer price inflation did halt its fall in March, coming up to zero annually, but still nowhere near the ECB’s 2 percent target ceiling.
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