Economic growth in the private sector in the euro zone slowed in May, reaching its lowest level in three months, weighed down by the fall in industrial production, according to the Flash PMI index published on Tuesday by S&P Global. The index, calculated on the basis of business surveys, came in at 53.3, after 54.1 in April. A number above 50 indicates growth in activity, while a number below indicates a decline.
For the fifth consecutive month, growth remains in positive territory in the 20 countries that share the single currency, but at the weakest pace since February. “The PMI data suggest an expansion of the euro area’s GDP in the second quarter, driven by the good performance of the services sector,” said Cyrus de la Rubia, an economist at Hamburg Commercial Bank, an S&P partner institution for the preparation of the report. .
A minimum of four months in France
Germany led the region’s growth in May, with German private sector activity posting its strongest expansion in 13 months, led by service companies posting their strongest growth since August 2021. But manufacturing output in the economy Europe’s largest suffered, at the same time, its sharpest fall in six months. At the same time, France, the euro zone’s second-largest economy, saw its overall activity slow, though still positive, to its lowest level in four months, with both services and manufacturing weakening. .
We must put into perspective the good performance of Germany, which is accompanied by a drop in new orders from manufacturing companies, more pronounced than in France. “The weakness of the manufacturing sector, particularly in Germany, is seriously hindering economic growth in the region,” says Cyrus de la Rubia.
End of the streak of post-pandemic activity
In the euro zone as a whole, despite the fall, “the PMI (…) suggests at first sight that the economy is expanding strongly in the second quarter, although the real GDP data turned out to be weaker than the first quarter polls. suggested,” said Andrew Kenningham, an analyst at Capital Economics.
But “the manufacturing sector appears to be contracting at a fast pace, with new orders and backlog declining, suggesting that the post-pandemic surge in activity is over,” he says. . He points out that companies’ hiring intentions remain “very strong”, again thanks to the service sector. Price pressures also remain “strong”, which he says argues in favor of another rate hike by the European Central Bank (ECB).
Source: BFM TV
