The growth rate of private sector activity in the Eurozone stabilized in April, changing the slowdown in the previous two months, indicating that the unexpected deceleration in the first quarter may have come to an end.

Data company IHS Markit announced on Monday that the Eurozone Composite Purchasing Managers' Index (PMI) for April was 55.2, the same as in March. The data comes from a survey of 5,000 manufacturers and service providers. This result was surprising. The forecast given by economists surveyed by “The Wall Street Journal” (The Wall Street Journal) last week fell to 54.8. A PMI above 50 means the expansion of economic activity.

However, although activity in the service sector has picked up, the growth rate of manufacturing, which is more export-oriented, continues to slow. This may reflect the impact of the euro's rise against other major currencies since the beginning of 2017. When the euro appreciates, Eurozone products appear more expensive to overseas buyers. In fact, the IHS Markit export order indicator fell to its lowest level in 18 months.

Chris Williamson, chief business economist at IHS Markit, said, “VeryObviously, potential demand has also weakened, partly because the appreciation of the euro has hit exports; given that firms' optimism about the future has fallen to its lowest level since last year, it seems likely that the growth rate of economic activity will slow further in the coming months.

By Paul Hannon

Copyright (c) 2018 Dow Jones Company. This article is copyrighted by Dow Jones, Inc., and may not be translated or reprinted without permission.