Downfall of business activity in eurozone confirms negative effects of US tariff policy

Business activity of eurozone, reduced in April, reached its minimal rates over the last months. As shown by the composite PMI from S&P Global, which has declined to 50.1 points, the region is on the verge of stagnation. It’s just 0.1 point above the threshold between growth and contraction.

The drop in activity was mostly noticeable in the region's largest economies, France and Germany, pressured by uncertainty over the trade tariffs. Cyrus de la Rubia from Hamburg Commercial Bank noted a slowdown in new orders, and predicted continued weakness in the economy. Meanwhile, Germany is expected to show some improvement due to increased government spending, although the effect will be delayed.

The increase of concerns regarding Trump trade policy caused the downfall of business activity in the service sector to its 5-year low. David Powell, senior economist of Bloomberg, stated that the eurozone economy is starting to feel the negative impact of the US trade tariffs. Despite the predicted avoidance of recession, the expert is convinced that the European Central Bank will have to continue to reduce interest rates.