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Business confidence in the euro zone plunged in April after the pricing announcements by Donald Trump, while the activity approached stagnation, while the trade war of the American president begins to drag in the economic region.
The flash estimate for the purchase managers index of the euro zone of the commercial Hamburg Bank, compiled by S&P Global, showed that the confidence of companies in April was at its lowest level since November 2022.
Wednesday figures also indicated that economic activity in the euro zone had fell to 50.1 points of 50.9 the previous month, hovering just above the crucial threshold of 50 which separates the contraction of expansion.
“The drop in confidence was widespread, both in terms of sectoral and geographic coverage,” according to The Flash Estimate, which is the first survey since Trump's “Liberation Day” in early April.
The American president then declared that he would impose a tariff rate of 20% on European goods exported to the United States, but he has since lowered the rate to 10% for 90 days to allow negotiations.
Last week, the European Central Bank reduced interest rates for the seventh time since June to 2.25%, stressing “exceptional uncertainty” and deterioration in growth prospects on “increasing trade tensions”. Traders and analysts expect the ECB continues to reduce loan costs in June.
“Previous Euro zone Optimism collapses and fears of disinflation and stagnation have returned, “wrote Carsten Brzeski, the world chief of Ing macro, in a note to customers, adding that” a greater drop in the manufacture of PMI next month “would not be surprising.
Germany, the largest economy in Europe, fell in the contractional territory, the composite PMI for the country plunged to a four -month low of 49.7 in April, against 51.3 in March.
However, manufacturing was stronger than expected. “Instead of falling from a cliff (the manufacturers have in fact increased production for the second consecutive month,” said Cyrus de la Rubia, chief economist at Hcob.
He added that the slowdown services sector had pushed “the whole economy in the territory of stagnation”.
The S&P Global Flash UK PMI index fell to a 29 -month lower 48.2 in April, compared to 51.5 in the previous month. It was less than 50.4 forecasts by economists interviewed by Reuters.
Melanie Debono, analyst at Pantheon Macroeconomics, said that data “show clear signs of the prosecutor price In the coming months ”.
Additional report by Valentina Romei in London
