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Germany’s Manufacturing PMI improved slightly to 48.0 in April but stayed below the 50 threshold, indicating ongoing contraction. The Services PMI dropped sharply to 48.8, missing expectations of 50.3 and falling back into contraction. The Composite PMI declined to 49.7, reflecting a broader slowdown across both manufacturing and services sectors.

France’s Manufacturing PMI slightly eased to 48.2 in April from 48.5 in March, better than estimates, but remained in contraction territory. The Services PMI fell to 46.8, below the forecast of 47.7, signaling a sharper decline. The Composite PMI also slipped to 47.3 from 48.0, indicating a continued slowdown in overall private sector activity.

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations, and the marginal lending facility will be decreased to 2.25%, 2.40%, and 2.65% respectively, with effect from 23 April 2025.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP and PEPP portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

The latest CPI figures for the Eurozone in March show inflation broadly aligned with expectations, with signs of moderating core pressures:

• CPI (YoY): 2.2% (in line with forecast, down from 2.3%)
• CPI (MoM): 0.6% (matching forecast, up from 0.4%)
• Core CPI (YoY): 2.4% (as expected, down from 2.6%)
• Core CPI (MoM): 1.0% (matching forecast, but double the prior 0.5%)
• CPI ex Tobacco (YoY): 2.1% (vs. 2.2% previously)
• CPI ex Tobacco (MoM): 0.6% (up from 0.4%)

While monthly inflation saw a seasonal rise—likely due to services and energy—yearly core inflation continues to ease, reinforcing the European Central Bank’s (ECB) cautious optimism. If the disinflation trend holds, the data keeps the ECB on track for potential rate cuts this summer. However, wage dynamics and service inflation will remain under scrutiny before policy decisions.

The Eurozone’s Industrial Production outperformed expectations in February, rising 1.1% MoM (vs. 0.1% expected) and 1.2% YoY (vs. -0.8% forecast), signaling a rebound in manufacturing momentum. However, the optimism was short-lived as the ZEW Economic Sentiment for April plunged to -18.5, missing forecasts of 13.2 and sharply down from March’s 39.8. This steep decline in investor sentiment highlights growing concerns about the bloc's economic outlook, likely tied to persistent inflation, weak demand, and geopolitical tensions.

Germany’s ZEW Economic Sentiment index plunged to -14.0 in April, sharply missing expectations of 10.6 and reversing significantly from March’s 51.6, marking a dramatic drop in investor confidence. Meanwhile, the ZEW Current Conditions index improved modestly to -81.2 from -87.6, beating forecasts of -86.0, but still reflecting a deeply pessimistic assessment of present economic conditions. The stark decline in forward-looking sentiment suggests growing concerns over Germany’s economic trajectory, potentially due to geopolitical risks, weak global demand, or domestic stagnation.

France's inflation data for March pointed to ongoing price stability, with the Consumer Price Index (CPI) rising by 0.8% year-over-year—unchanged from the previous month and in line with expectations. On a monthly basis, CPI increased by 0.2%, up from 0.0% previously. Harmonized CPI (HICP), which aligns with EU standards, also remained steady, registering a 0.9% annual increase and a 0.2% monthly rise. Inflation excluding tobacco was unchanged at 0.7% year-over-year. These stable figures support the narrative of easing price pressures in France, reinforcing expectations for policy stability from the European Central Bank.

Switzerland’s Producer Price Index (PPI) rose by 0.1% month-over-month in March, slightly below expectations of 0.2% and down from February’s 0.3% increase. On an annual basis, the PPI held steady at -0.1%, indicating continued mild deflationary pressure in producer prices. The data suggests that cost pressures in the Swiss production sector remain minimal, allowing the Swiss National Bank to maintain a cautious policy stance amid a stable inflation environment.

Germany's consumer price index (CPI) rose by 2.2% year-on-year in March, in line with market expectations and slightly lower than February’s 2.3%, suggesting that inflationary pressures remain contained. On a monthly basis, prices increased by 0.3%, also matching forecasts but easing from the previous 0.4% rise. The stable inflation figures may support the European Central Bank’s cautious stance on monetary policy, as price growth continues to moderate without major surprises.

Eurozone retail sales rose by 2.3% year-over-year in February, beating 1.8% expectations, and January’s growth. On a monthly basis, sales increased by 0.3%, slightly below the 0.5% forecast but an improvement from the flat reading in January.

Germany's industrial production fell by 1.3% month-over-month in February, worse than the expected 0.9% decline and sharply reversing January’s 2.0% gain. On an annual basis, output contracted by 4.0%, deepening the previous 1.49% drop and signaling continued weakness in the country's manufacturing sector.

Germany’s exports rose by 1.8% month-over-month in February, rebounding from flat growth in the previous month. Imports also increased, albeit modestly, by 0.7%, following a strong 5.0% gain in January. As a result, the trade surplus expanded to €17.7 billion, slightly below expectations of €18.4 billion but up from €16.2 billion previously.