April saw the largest rise in prices in the eurozone ever recorded by a leading business survey.
The S&P Global monthly survey of businesses, the PMI index, reported on Friday record jumps in both goods and services. The hike in prices was driven by a rise of input costs — the second-highest on record since the series started in 1998, and the highest ever recorded in Germany — including for energy and wages, pointing to a continued inflationary trend.
"Average prices charged for goods and services rose at an unprecedented rate in April as these higher costs were passed on to customers, sending a worrying signal that inflationary pressures continue to build," wrote Chris Williamson, chief business economist at S&P Global.
On the bright side, economic activity in the eurozone rebounded in April, driven by increase in leisure activities and travel. But manufacturing came close to stalling, constrained by supply chain disruptions and high prices.
The Flash Eurozone PMI composite output index, a measure of economic activity across sectors, registered a seven-month high at 55.8, while the Flash Eurozone Manufacturing PMI registered a 15-month low at 55.3.
Across the eurozone, Germany registered the biggest slump in growth, hitting a three-month low as the first fall in manufacturing output since June 2020 offset the growth in services. Meanwhile, France registered its fasted growth since January 2018, driven mostly by a surge in services.
"The eurozone has therefore started the second quarter on a stronger than anticipated footing, confounding consensus expectations of a slowdown," Williamson wrote. "However, the weakness of the manufacturing sector is a major concern."
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