Eurozone PMI Slide Exposes Energy Fragility
The eurozone's April composite PMI fell to 48.6, down from 50.7, indicating a contraction in private activity, with Germany being the fulcrum of the downturn. Euro-zone inflation accelerated to 2.5 percent as energy prices rose nearly 5 percent year on year.
The eurozone's economy is showing signs of fragility as the April composite PMI fell to 48.6, down from 50.7. A PMI below 50 signals contraction in private activity, with Germany again being the fulcrum of the downturn. Inflation edged up to 2.5 percent in March as energy prices jumped, with Brent crude pushing past $100 a barrel. Europe's heavy import dependence turns geopolitical scarcity into domestic price pressure. The European Central Bank faces a trap: ease too fast into a cost-push shock and entrench price expectations, or stay tight into contraction and deepen the output loss. Policymakers warn that investors are underestimating the damage, and the risk of stagflation is rising.
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