The euro zone's private sector grew at its fastest pace in a year in May as strong demand boosted output and employment amid slowing inflation, final data from S&P Global's Purchasing Managers' Survey compiled on Wednesday showed.
The HCOB composite production index rose to 52.2 in May from 51.7 in the previous month. The preliminary reading was 52.3.
The data showed the private sector posted the strongest increase in economic activity since May 2023.
The services PMI came in at 53.2 in May, little changed from April's 11-month high of 53.3. The preliminary reading was also 53.3.
The survey showed that the economic recovery is being supported by strengthening demand.
New orders increased at the fastest pace since April 2023. The improvement in sales performance was confined to the domestic market. market As good as new work The number of arrivals from overseas declined, in line with the trend since March 2022.
Survey respondents' confidence has improved in seven of the past eight months, with levels of positive sentiment reaching their highest since February 2022.
Eurozone companies added jobs for the fifth consecutive month, with the rate of job creation unchanged from April and the fastest pace since June 2023.
The survey suggested there was no remaining evidence that rising sales were straining capacity, as backlogs fell for the 14th consecutive month.
Price indicators showed that inflationary pressures were easing across the euro area, with inflation settling to a six-month low, although input costs remained rising sharply and output prices also rose significantly.
“The fear of a recession is gone,” said Cyrus de la Rubia, chief economist at Hamburg Merkbank.
De la Rubia said the price structure of services sector points to a slight easing of inflationary pressures, increasing the likelihood of an ECB rate cut on June 6.
Economists added that the PMI price index is still not a silver lining, as it is unusually high in a rather weak economic climate.
Of the four biggest economies, France was the only one to report another recession, while Germany and Spain recorded growth gains, while Italy's private sector growth fell to its lowest level since February.
Survey data showed German private sector growth picked up steam in May, with the pace of expansion hitting its highest in a year. The final HCOB headline production index rose to 52.4 from 50.6 in April. The preliminary reading was 52.2.
The Services PMI rose to a 12-month high of 54.2 in May, up from 53.2 in April. The score was well above the initial estimate of 53.9.
France's private sector fell into contraction territory in May. The headline output index fell to 48.9 in May, down from 50.5 in April and a flash reading of 49.1.
The services PMI fell to 49.3 in May from 51.3 in the previous month. The initial reading for May was 49.4.
Italy's private sector growth slowed in May as the slump in manufacturing production deepened while the services sector continued to drive output expansion.
The HCOB composite production index fell to 52.3 in May from 52.6 in the previous month. The Services PMI was 54.2 in May, down slightly from 54.3 in April and economists' expectations of 54.4.
Meanwhile, private sector growth in Spain accelerated to a 14-month high in May, driven by faster expansion in both manufacturing and services.
The composite production index rose to 56.6 from 55.7 in April. The services PMI rose to 56.9 from 56.2 in April. The score was expected to rise to 56.5.
Renju Jaya
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