Euro zone manufacturing activity contracted slightly more slowly than expected in May, according to revised forecasts published on Monday by S&P Global and the Hamburg Commercial Bank (HCOB), signalling a “turning point” for the sector.
The final estimate of the euro zone's manufacturing Purchasing Managers' Index (PMI) came in at 47.3 last month.
That's still well below the crucial 50-point mark that separates expansion from contraction – a level not crossed since June 2022 – but it's slightly below the provisional estimate of 47.4 released two weeks ago, but up from 45.7 in April.
Still, the index improved for a third straight month, reaching its highest level since March 2023 and marking its smallest percentage decline in more than a year.
Manufacturing PMIs improved in most countries surveyed, with the recession easing in major economies Germany and France and growth accelerating in Spain and the Netherlands.
“This could be a turning point for manufacturing, as the industry seeks to end the decline in production that has continued since April 2023,” said HCOB chief economist Silas de la Rubia.
“This is mainly supported by the favorable trends in intermediate and capital goods. Moreover, an increasing number of companies are reporting stronger orders from domestic and international markets, but this is still offset by the fact that most companies suffered a decline in orders in May. Encouragingly, business confidence regarding future production is at its highest level since the beginning of 2022.”
