Eurozone growth slows in may - PMI survey
Eurozone business activity slowed more than expected in May as services slipped slightly and the manufacturing sector slowdown continued, according to initial survey results released on Tuesday.
The S&P Global flash Composite Purchasing Managers' Index (PMI) for the single currency bloc fell to 53.3 in May from April's 54.1 and against estimates for a reading of 53.5. A mark of 50 separates growth from contraction.
May’s services PMI fell from April's one-year high of 56.2 to 55.9. Demand for manufactured goods sank and the factory PMI fell to 44.6 from 45.8, its lowest since May 2020 .
“This is the first sign of cracks in these data for a while, though relatively minor ones in the end. The divergence between manufacturing and services is now stark,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
“Output in services rose at its second-fastest rate in a year, while the downturn in manufacturing production quickened to a six-month low. This split carried over into new orders and employment.”
“Inflation pressures in selling prices remained elevated, due mainly to strength in services amid increasingly clear signs of disinflation in goods.”
Vistesen added that he doubted the Eurozone economy was now entering recession, “but we don’t think it is rebounding either”.
“In particular, we are inclined to see strength in the services PMIs partly as a reflecting of strong nominal activity, which does not necessarily reflect strength in real GDP. “
“Remember that PMI respondents are not asked to report on price-adjusted changes in output, and more generally, these surveys have never been exposed to a proper inflation shock before.”
Reporting by Frank Prenesti for Sharecast.com