Eurozone “flash” PMI results for April released on Monday were much weaker than expected here – a solid German Ifo business survey last week together with stable analyst expectations for company earnings and less negative leading indicators had suggested improvement.

It is, however, possible that the PMIs have yet to reflect easier monetary conditions resulting from the ECB’s interest rate cuts and liquidity injections. This view is supported by today’s ECB bank lending survey, showing sharp declines in the net percentages of banks tightening or planning to tighten credit standards on loans to enterprises. The tightening percentages lead (inversely) industrial activity, suggesting a stabilisation or recovery in output into the summer – see chart.

The case for optimism would be increased by a solid March increase in Eurozone M1 in money supply numbers to be reported on Monday.