Global PMI Summary – April 2025: Sluggish Growth, Diverging Inflation Trends, and Mounting Tariff Pressures

The global economic environment in April painted a picture of fragile and uneven growth, with stark contrasts across major economies. India stood out as the clear outperformer, posting its highest Composite PMI in eight months (60.0), underpinned by booming export demand and robust domestic consumption. In contrast, the UK slipped into contraction for the first time in 18 months, while Germany and the broader Eurozone hovered just around stagnation. Japan returned to modest growth, but optimism faded due to demographic and trade challenges. Australia’s economy continued to expand, albeit at a slightly softer pace. Meanwhile, new order flows were generally weak across developed economies, with the Eurozone and UK posting the fastest declines of the year so far, largely tied to global demand softness and mounting tariff fears.

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On inflation, the picture was equally complex. Cost pressures flared in the UK and Japan, driven by rising wages, National Insurance contributions, and energy and import costs—factors that contributed to aggressive output price hikes, especially in manufacturing. Australia also faced a notable resurgence in inflation, with producers raising selling prices at the fastest pace in over two years. In contrast, the Eurozone saw easing cost inflation, particularly in manufacturing, where input prices declined. However, factory gate prices there rose at a two-year high, suggesting potential pricing power is returning in goods-producing sectors. India's inflation profile remained relatively benign, despite record-high export demand and output levels, while services firms there faced a quicker rise in cost burdens.

Across the board, tariffs and trade friction emerged as a persistent drag on sentiment and forward visibility. The UK experienced the most acute impact, with export orders collapsing at the fastest rate since May 2020, and sentiment falling to its lowest in over two years. Germany’s services sector suffered from deteriorating client confidence linked to tariffs, though manufacturers benefited modestly from frontloaded export orders. Japanese and Australian firms flagged tariffs as a major concern weighing on global competitiveness and long-term planning, while the Eurozone reported widespread hesitation in capital spending amid trade-related uncertainty. Despite India’s export resilience, business confidence softened overall, reflecting broader global anxieties.

In sum, while the global economy avoided a synchronized downturn in April, the growth outlook remains uneven and clouded by tariff risks, eroding sentiment, and sectoral divergence. Services, long the engine of global expansion post-COVID, are now showing signs of fatigue in advanced economies, while manufacturing is stabilizing—if tentatively. Inflation pressures remain sticky in many regions and are becoming increasingly service-led, complicating central bank policy in the face of decelerating growth and escalating geopolitical trade tensions.

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Eurozone-

Eurozone business activity stagnated in April as the HCOB Flash Composite PMI Output Index slipped to 50.1 from March’s 50.9, marking a four-month low and signaling near-zero growth. The divergence between sectors continued: services fell back into contraction territory with a reading of 49.7—the weakest in five months—while manufacturing output climbed to a 35-month high of 51.2, despite the broader Manufacturing PMI remaining below the growth threshold at 48.7. Notably, new orders declined at the fastest pace so far in 2025, reflecting broad-based demand weakness. Germany reversed its March gains with a renewed contraction, France deepened its downturn, and growth momentum in the rest of the Eurozone moderated.

Sentiment deteriorated sharply across sectors and geographies, with business confidence dropping to its lowest level since November 2022. Employment stagnated overall, as job losses in manufacturing outweighed modest hiring in services. Inflationary pressures eased slightly: input prices rose at their softest pace since November 2024, though services firms continued to face strong cost inflation. Manufacturing input costs fell for the first time in five months, while factory output prices rose at a two-year high, suggesting early pricing power recovery in goods. Services price inflation slowed to a seven-month low, and overall selling price growth moderated. Continued weakness in new orders, fading optimism, and subdued hiring suggest economic momentum remains fragile as the Eurozone grapples with tariff uncertainty and tepid domestic demand.

Germany-

Germany's private sector activity fell back into contraction territory in April, with the HCOB Flash Composite PMI slipping to 49.7 from 51.3 in March—the lowest reading in four months. The decline was led by the services sector, where the Business Activity Index dropped to 48.8, the weakest in 14 months, amid growing tariff-related concerns that dampened client confidence and spending. Meanwhile, manufacturing fared slightly better: although the overall Manufacturing PMI declined to 48.0, the Output Index remained in expansion at 51.6, indicating modest growth. Notably, export orders in manufacturing rose for the first time in over three years, driven partly by stockpiling ahead of potential trade restrictions.

Inflation trends were mixed across sectors. Manufacturing input prices saw their steepest drop in years due to lower commodity prices and a stronger euro, yet factory gate prices rose for the first time in nearly two years—signaling a potential bottoming in industrial deflation. In contrast, the services sector continued to experience solid cost inflation, with a sharper rise in input costs not fully passed on to consumers, squeezing margins. Employment trends diverged: manufacturing jobs fell again, but at a slower pace, while services posted the strongest hiring since May 2023. Business sentiment weakened significantly, especially in services, reflecting concerns over global trade policy and a murky economic outlook. While underlying pressures remain, particularly in services, manufacturers appear more resilient for now, bolstered by easing cost burdens and tentative external demand.

U.K.-

UK private sector activity contracted in April for the first time in 18 months, as the S&P Global Flash Composite PMI fell sharply to 48.2 from 51.5 in March—a 29-month low. The decline was driven by both manufacturing and services, with the Services Business Activity Index dropping to 48.9 (from 52.5), marking the first contraction in the sector since late 2022. Manufacturing output saw an even steeper drop, with the Manufacturing Output Index falling to 44.0, the weakest since August 2022. The data reflect deteriorating domestic and global demand conditions, particularly in light of heightened US trade tariffs, which contributed to the sharpest drop in new export orders since May 2020. New work fell for the fifth straight month, and total new export business in manufacturing suffered its worst non-pandemic-related decline since the financial crisis in 2009.

Employment continued to decline for the seventh consecutive month amid weaker workloads and surging payroll costs, including higher National Insurance and minimum wage hikes. Input cost inflation accelerated to its fastest pace since February 2023, with output charges rising at the strongest rate in nearly two years, driven mainly by factory gate price hikes. Business sentiment deteriorated sharply across both sectors, hitting its lowest level since October 2022, as firms cited growing recession risks, global trade uncertainty, and worsening geopolitical conditions. With GDP now likely contracting at a 0.3% quarterly rate, the data raise pressure on the Bank of England to consider rate cuts, though recent inflation trends complicate the case for an immediate policy shift.

Japan-

Japan’s private sector returned to expansion territory in April, with the au Jibun Bank Flash Composite PMI rising to 51.1 from 48.9 in March, driven by a modest but notable rebound in the services sector. The Services Business Activity Index increased to 52.2 from 50.0, the highest in three months, supported by stronger domestic demand and hiring at the fastest pace since January. Meanwhile, the Manufacturing Output Index rose to 48.9 from 46.6, indicating that the factory sector remains in contraction but is stabilizing, helped by a slower decline in production. However, new orders for manufacturers fell sharply—at the fastest pace since February 2024—largely due to weakening export demand and growing concern over tariffs.

Inflation remains a central concern across both sectors. Input prices surged at the fastest pace in two years, prompting firms to raise output prices solidly, particularly in services. Service providers also reported expanding backlogs, suggesting persistent supply-demand imbalances. While employment trends remained positive, business sentiment took a hit—overall optimism fell to its lowest level since August 2020, amid uncertainty over global trade, the impact of U.S. tariffs, and Japan’s demographic challenges. April’s data paints a picture of fragile growth, supported by resilient services, but overshadowed by inflation pressures and waning confidence in Japan’s economic trajectory.

Australia-

Australia's private sector continued to expand in April, with the Flash Composite PMI Output Index posting a modest 51.4, slightly below March's 51.6 but still marking the seventh consecutive month of growth. Both the Services PMI and Manufacturing PMI also edged lower to 51.4 and 51.7, respectively, each at two-month lows. While growth cooled marginally, new business inflows rose at the fastest rate since April 2022, helping to drive the sharpest buildup in backlogs in nearly three years. Notably, employment levels held steady at their strongest pace in nearly two years, reflecting ongoing confidence in labor demand despite rising uncertainties tied to global trade and geopolitics.

Inflationary pressures re-emerged as a central concern, particularly in manufacturing, where cost burdens intensified due to rising material, energy, and wage costs alongside a weakening Australian dollar. This pushed manufacturers to raise selling prices at the fastest pace in over two years, resulting in the highest overall output price inflation in nine months. While service sector input inflation was somewhat softer, the composite inflation trend remains elevated, underscoring risks for future rate policy. Business confidence, however, dipped to its lowest since October, weighed down by export weakness and tariff-related concerns. While domestic demand remains resilient, April's report highlights the tension between solid internal momentum and external trade headwinds that could cloud the outlook in the months ahead.

India-

India's private sector maintained strong momentum in April, with the hsbc Flash Composite PMI rising to 60.0 from 59.5 in March—its highest level since August 2024. Growth was broad-based, led by the manufacturing sector, where the PMI improved to 58.4 from 58.1, while services activity also strengthened with the Services Business Activity Index climbing to 59.1. The manufacturing output index surged to 61.9, reflecting solid operational conditions. New orders—both domestic and international—rose sharply, with new export business expanding at the fastest pace on record. Firms cited efficiency gains, rupee depreciation, and improved global competitiveness as key drivers. Buoyant demand resulted in the quickest buildup of backlogs since August 2022, prompting companies across sectors to increase hiring at a robust and balanced pace.

Inflation pressures persisted but remained relatively stable. Input cost inflation was unchanged from March and continued to run below the long-term average, despite reports of higher prices for chemicals, steel, freight, and labor. Services firms saw a quicker rise in expenses, while manufacturers drove output charge inflation—recording the steepest increase in selling prices in over 12 years. Business sentiment was mixed: optimism improved in manufacturing but waned in services, with composite confidence falling to an eight-month low amid concerns over competition and cost pressures. The report also noted strong inventory management trends among manufacturers, who stepped up input purchases to mitigate supply risks, even as post-production inventories fell sharply due to strong order fulfillment.