Eurozone business activity stagnated in April 2025, with the composite PMI barely above contraction at 50.1a four-month lowreflecting deepening uncertainty and a steep decline in new orders, the sharpest this year. Services slipped into contraction (49.7), while manufacturing showed slight but improving resilience (48.7), marking its highest reading in over two years.

Business confidence has fallen since late 2022, with firms across all major economies growing cautious about future prospects. Demand remains weak, dragged down by shrinking export ordersan uninterrupted trend since March 2022. France continued to decline, Germany reversed its March growth, and only the rest of the bloc maintained modest output expansion.

Employment gains from March evaporated, as staff cuts in manufacturing offset slight service sector hiring. Despite minimal job creation, firms effectively worked through existing backlogs, signalling little pressure on capacity.

Inflationary pressures cooled across the board, with input costs rising more slowly, especially in manufacturing, where costs declined. Nonetheless, output charges increased, particularly in manufacturing, which saw its fastest inflation in two years. Meanwhile, supply chains improved further, with the fastest delivery times recorded since June 2024. The latest update takes the RPI to minus 6 and the RPI-P to 6. This means that economic activities are within the expectations of the euro area.

With the tariff shock starting to be felt, the composite flash is expected at 50.4 versus 50.9 in the March final. Manufacturing is expected down at 47.5 versus 48.6. Services is seen at 50.5 versus 51.0.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The survey, produced by S&P Global uses a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.