The fragility of manufacturing sector of the Eurozone was once again clear from May's Purchasing Managers' Index, with manufacturing orders falling for the first time since June 2020: decreased in May to 54.6, from 55.5 in April, signaling a weaker improvement in the health check of the manufacturing sector in Europe. The overall index declined to its lowest value in 18 months and, at the sector level, the latest data showed slower growth in all three sub-sectors monitored. This is what emerges from the latest report by S&P Global on SMEs, the seasonally adjusted indexes on the expectations of purchasing managers of manufacturing companies.
Although output growth rose marginally from its low in April, it remained sluggish, while business confidence was among its lowest in two years, amid continued concerns about the outlook for demand and supply chains. Also, price data reported inflationary pressures still consistent in May, although the rates of increase in input costs and production costs have moderated slightly
The PMI indices for May for the Eurozone and Europe
In the Eurozone, the PMI index was indicated down to 54,6 points from the previous 55,5 but higher than the 54,4 in the flash estimate. However, the indicator of the state of health of the manufacturing sector is confirmed as above the 50-point threshold, which acts as a watershed between expansion and contraction. Below are the indices of the main countries:
Germany: PMI index up to 54,8 points (high in 2 months) compared to the previous 54,6 and 54,7 expected.
Italy: the PMI weakened to 51,9 points (minimum in 18 months) from the previous 54,5, resulting below the 53,5 consensus.
France: slow pace of expansion of the S&P Global services PMI dropped to 54,6 (lowest in 7 months) from 55,7 previously and 54,5 expected.
Spain: records an improvement to 53,8 points (high in 2 months) from 53,3 in the previous month and to the expected 52.
Uk: slightly slows down activity in the manufacturing sector. The PMI index fell slightly in May to 54,6 from 55,8 points in April.
"Eurozone producers continue to struggle against the headwinds of supply shortages, high inflationary pressures and weakening demand, amid growing uncertainty about the economic outlook," he said in a statement. Chris Williamson, Chief Business Economist at S&P Global, analyzing final Eurozone Composite PMI data -. The deteriorating health of the manufacturing sector has also been exacerbated by the shift in demand towards services, as consumers increase spending on activities such as tourism and recreation,” Williamson concluded.
