Eurozone Private Sector Growth Remains Subdued On Weak Factory Activity
May 23 2019 - 3:30AM
RTTF2
Eurozone private sector growth remained subdued in May as
manufacturing contracted further, survey data from IHS Markit
showed Thursday.
The composite output index rose marginally to 51.6 in May from
51.5 in April. The score was forecast to rise to 51.7. A reading
above 50 indicates expansion.
The weak PMI reading puts growth in the second quarter so far on
a par with the lackluster gain seen in the first quarter and was
among the lowest recorded since mid-2013, Markit said.
At current levels, the PMI is so far indicating GDP growth of
only 0.2 percent in the second quarter, Chris Williamson, chief
business economist at IHS Markit, said.
In the latest Economic Outlook, the Organization for Economic
Co-operation and Development forecast the euro area to grow 1.2
percent this year and 1.4 percent next year.
The think tank renewed its calls for combining structural
reforms in all euro area countries with additional public
investment in low-debt European countries.
The IHS Markit survey showed that after rising to a five-month
high in April, growth of new business waned again, and new export
orders declined markedly.
Jobs growth slipped to the joint-lowest since September 2016 as
firms scaled back expansion plans in the light of weak sales.
Moreover, optimism about the future slumped to a four-and-a-half
year low and inflationary pressures moderated as competition
limited sellers' pricing power.
The manufacturing Purchasing Managers' Index slid to 47.7 from
47.9 in April. The score was forecast to rise to 48.1.
The services PMI fell to 52.5 from 52.8 in the previous month.
Economists had forecast a score of 53.0.
Only national data for France and Germany are published. Growth
edged higher in Germany, thanks to sustained service sector growth
and an easing in the rate of decline of manufacturing output.
Germany's composite output index rose unexpectedly to a
three-month high of 52.4 in May from 52.2 in April. The score was
also above the expected level of 52.0.
The manufacturing PMI fell unexpectedly to 44.3 from 44.4 in
April. The expected score was 44.8.
At the same time, the services PMI dropped to a 4-month low of
55.0 from 55.7 in the previous month. The reading was forecast to
fall moderately to 55.4.
Elsewhere, France's private sector activity expanded at the
fastest pace in six months in May.
France's flash composite output index rose more-than-expected to
51.3 in May from 50.1 in April. The score was forecast to rise to
50.3. The services PMI climbed to 51.7 from 50.5 in the previous
month. The expected reading was 50.8. The manufacturing PMI came in
at 50.6 in May, up from 50.0 in April but below the forecast of
50.8.
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