Business activity
The latest PMI report indicates accelerated growth in the Eurozone economy, primarily driven by heightened commercial activity and robust demand conditions. Despite inflation, job creation remains positive, with optimism for sustained growth in the coming months.
The last report from PMI indicates an upswing in the Eurozone economy, with growth reaching 52.2 in May compared to 51.7 in April, marking its most rapid pace in a year. This expansion has primarily stemmed from heightened commercial activity during May, bolstered by robust demand conditions, resulting in increased production and recruitment. Despite a moderation in inflation rates, they persist above pre-pandemic levels, underscoring the region's economic resilience. Spain leads the growth, trailed by Germany and Italy, while France experiences a slight setback.
The services sector has been pivotal in driving this growth, registering a substantial uptick in activity at 53.2, supported by a surge in new orders. Although the Manufacturing Sector Index for the Eurozone rose from 45.7 in April to 47.3 in May, it remains below the critical 50-point threshold denoting expansion. Nevertheless, this marks the sector's slowest decline in a year, hinting at a possible reversal in the longstanding downturn of the Eurozone’s manufacturing sector. Despite inflationary pressures, companies have efficiently managed their workload, sustaining a positive trajectory in job creation. Prospects appear optimistic, with heightened business confidence and forecasts of sustained growth in the second quarter. While France exhibits weaker performance, alignment with other Eurozone economies is anticipated in the upcoming months, ensuring continuous regional growth.
As composite PMIs across key Eurozone nations exhibit signs of improvement, confidence in the sector's ability to navigate uncertainties and foster sustainable growth in the future is mounting. We anticipate that with the rate cut, the manufacturing sector will edge closer to the expansion territory.