Strengthening demand conditions have led to increased production and employment, and business confidence improved for the seventh time in the past eight months.
The Eurozone economy recorded a third consecutive month of increased business activity in May, with growth accelerating to its highest level in a year. This was the biggest increase in Eurozone economic activity since May 2023. The HCOB Eurozone Composite PMI Production Index rose to a 12-month high of 52.2. Business confidence rose to a 27-month high and inflation eased.
On price trends, the latest survey results show that input and output cost inflation has slowed but remains above their pre-pandemic averages, S&P Global said in a release.
The seasonally adjusted HCOB Eurozone Composite PMI Production Index (a weighted average of the HCOB Manufacturing PMI Production Index and the HCOB Services PMI Business Activity Index) has risen consistently so far this year, increasing to a one-year high of 52.2 from 51.7 in April.
Overall, this represented the biggest increase in euro area economic activity since May 2023 and was slightly weaker than the average since 1998, when data first became available.
Of the euro area's top four countries, France was the exception in May, with private sector activity contracting slightly again, in contrast to growth in Germany, Spain and Italy.
Spain's economy grew rapidly to its highest level in 14 months, consolidating its position as the top performer.
Germany, the European Union's largest economy, also recorded a significant economic recovery, with output growing at its fastest pace in a year.
Meanwhile, Italy's economic growth lost momentum, falling to its lowest level since February.
Strengthening demand conditions were the main reason for the pick-up in corporate production across the euro area in May.
Total new orders increased for the second consecutive month, marking the fastest growth since April 2023. The decline in factory orders eased significantly compared to the previous month.
The latest survey data showed that new orders from overseas declined in line with the trend since March 2022, suggesting that the improvement in sales performance was limited to the domestic market.
After a slight setback in April, confidence in the outlook for business activity over the coming year strengthened in May. Overall, growth expectations have improved in seven of the past eight months.
Levels of positive sentiment reached their highest since February 2022 and were well above their long-term average.
Eurozone companies added jobs for the fifth consecutive month, with job creation remaining at the same rate as April and the highest record since June 2023.
Meanwhile, price indicators suggested that inflationary pressures across the euro area were easing in the middle of the second quarter of this year.
However, input cost increases remain steep and well above pre-pandemic averages. The story is similar for output prices, with sales charge inflation easing to a six-month low but still significantly higher than the pre-2020 average.
Fibre2Fashion News Desk (DS)
