Eurozone business activity accelerates in April

LONDON

Business activity in the eurozone picked up in April thanks to "increasingly robust" growth in the services sector, a closely watched survey showed on April 23.

The HCOB Flash Eurozone purchasing managers' index (PMI) published by S&P Global registered a figure of 51.4 in April from 50.3 in March. It was the highest in 11 months. Any reading above 50 indicates growth, while a figure below 50 shows contraction.

"The eurozone got off to a good start in the second quarter," Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said in the statement on the PMI reading.

But the survey showed activity was growing "modestly" as manufacturing output continued to fall, although the decline was not as steep as previously.

"Increasingly robust service sector growth was nevertheless accompanied by signs of a further moderation of the manufacturing downturn," S&P Global said.

Economists said the data shows the 20-nation single currency is pulling out of the recent downturn, but the European Central Bank would still cut interest rates in June.

"The bigger-than-expected increase... suggests that the euro-zone is coming out of recession, but this will not prevent the ECB from cutting interest rates in June," Andrew Kenningham of London-based consulting firm Capital Economics.

"While these surveys are good news for the economy, we suspect that any growth will be remain quite weak in the near term," he added.

The ECB hiked rates at a record pace to tame red-hot price rises, but there are now growing calls to cut as eurozone inflation approaches the institution's two-percent target. Inflation slowed to 2.4 percent in March.

The survey also indicated that the situation in the European Union's two economic powerhouses, France and Germany, is improving.

Germany returned to growth in April, which will be welcome news to Berlin after criticism that its economy was slowing down the rest of Europe.