In May, the Eurozone experienced an expansion in business activity at its fastest rate in a year, driven by growth in the services industry and a slight improvement in manufacturing. This was reflected in the composite Purchasing Managers’ Index (PMI) for the currency union, which rose to 52.2, its highest since May 2023, indicating overall economic health. Despite being slightly lower than the preliminary estimate of 52.3, it remained above the 50 mark, signaling growth for the third consecutive month.
The service sector played a crucial role in keeping the Eurozone economy afloat, with the services PMI slightly easing to 53.2 in May. However, this slight dip did not dampen optimism as the composite future output index surged to 63.1, the highest since February 2022, indicating a positive outlook for the year ahead. This optimism led to an increase in hiring by services firms at the fastest pace in 11 months.
On the other hand, the manufacturing sector showed signs of improvement as well, with the index measuring manufacturing activity rising to 47.3 in May from April’s 45.7. The brightening outlook was accompanied by easing price pressures as output prices increased at their slowest pace since six months ago. This may provide reassurance to European Central Bank officials who are expected to deliver a 25-basis-point interest rate cut in the near future
