Eurozone factory activity picks up in April but the devil is in the details

AI summary

<ul><li>Manufacturing PMI 52.2 vs 52.2 prelim</li><li>Prior 51.6</li></ul><p class="text-align-justify">Much like the country-level reports would suggest, it is all about stockpiling here. That is the main reason boosting euro area manufacturing activity in April as both output and new orders pick up, but arguably for the wrong reason. Of note, it is the first time since June 2022 that all eight of the euro area countries covered by the survey registered readings above the 50.0 threshold.</p><p class="text-align-justify">But again, the devil is in the details.</p><p class="text-align-justify">Delivery times continue to shoot higher with delays reportedly being the worst since July 2022. Survey respondents cited bulk ordering, logistical disruptions arising from the war in the Middle East and reduced raw material availability as reasons for that. As such, it points to supply chain issues starting to become more evident.</p><p class="text-align-justify">Meanwhile, inflation pressures also intensified further as input price inflation jumped higher once again, hitting a 46-month high. That has also now started to translate to higher output charge inflation, with that accelerating to a 39-month high. Ouch.</p><p class="text-align-justify">HCOB notes that:</p><p class="text-align-justify">"Although the PMI has risen to its highest for nearly four years, the survey is more a cause for alarm than celebration. </p><p class="text-align-justify">"Production and orders books are being bu