Growth was again led by Germany, Europe's largest economy, and
previously-lagging companies in Spain and Italy reported better
business last month.
It was the first time since November 2007 that all PMIs in the
region indicated growth — coming in above the 50 break-even level.
But separate data showed euro zone unemployment fell only slightly
to 11.8 percent in March, still near a record high, a sign that
European households are yet to feel much of the corporate economic
"Recent economic evidence remains consistent with the European
Central Bank's baseline scenario which is that of a gradual
recovery," said Philip Shaw at Investec.
"There are concerns about the confidence in France and the extent to
which that could restrain economic growth this year and next."
Also of concern to the ECB's Governing Council, which meets next
week to set monetary policy, factories cut goods prices for a second
straight month — and at a slightly steeper pace.
Official flash data on Wednesday showed euro zone inflation rose to
only 0.7 percent last month from 0.5 percent the month before, still
well below the ECB's 2 percent target ceiling and within what the
central bank regards as a "danger zone".
"With factory gate prices falling for a second month running,
policymakers will remain concerned about deflationary forces," Chris
Williamson, Markit's chief economist, said.
The bloc is set for at least two more years of low inflation and
still faces a very real threat of deflation, a Reuters poll found
Financial markets were little moved after the latest PMI data,
trading cautiously as they awaited U.S. employment figures due later
The final Eurozone Manufacturing Purchasing Managers' Index rose to
53.4 last month from March's 53.0. That was slightly better than the
flash reading of 53.3 and marked the tenth month the index has been
above the 50 level that separates growth from contraction.
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The manufacturing output index, which forms part of the overall
Composite PMI due on Tuesday, jumped to 56.5 from 55.6, in line with
the flash reading.
"Improved manufacturing activity in April suggests that euro zone
economic recovery is continuing to gradually firm following likely
modestly improved GDP growth in the first quarter," said Howard
Archer at IHS Global Insight.
An earlier PMI from Germany showed improving growth. Italy's PMI
soared to a three-year high and Spain's slipped just one basis point
from March's near four-year high.
France's main index slumped to 51.2 from 52.1, although still
holding above the break-even level for a second month.
President Francois Hollande, who has seen his popularity plummet
amid weak economic growth and rising joblessness, plans to phase out
30 billion euros ($42 billion) in payroll taxes on companies in
exchange for them committing to hiring targets.
In Britain, which does not use the euro, the construction sector
expanded for the 12th straight month in April, albeit at the slowest
rate in six months.
(Editing by Toby Chopra)
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