The eurozone economy is stuck in 'low gear'
The eurozone economy had a PMI reading of 53.1, according to Markit, marginally better than the 53 reading seen in April and above the 52.9 preliminary reading.
The purchasing managers index (PMI) figures are given as a number between 0 and 100 and are a measure of economic activity. Anything above 50 signals growth, while anything below means a contraction - so the higher the better. Wednesday's data is the final data of the month, following on from Markit's flash readings in late April.
Markit's statement alongside the data said (emphasis ours):
Eurozone economic growth remained subdued during May, with the rate of expansion achieved so far during the second quarter a touch below that seen in quarter one.
The upturn was again led by the service sector, which saw a modest growth acceleration. Manufacturing production also continued to rise, albeit at a slightly lesser pace than in April.
Here's what Chris Williamson, Markit's chief economist had to say (emphasis ours):
The final PMI numbers for May have come in slightly ahead of the earlier flash readings, but still point to a eurozone economy which seems unable to move out of low gear.
The survey data are signalling a GDP rise of 0.3% in the second quarter, suggesting the growth spurt seen at the start of the year will prove frustratingly short-lived.
June looks likely to prove equally disappointing, as inflows of new business slowed in May to the weakest for almost one-and-a-half years.
Such a lacklustre performance in the second quarter points to an ongoing lack of growth momentum, which in turn raises the prospect of policymakers seeking new ways to stimulate growth.
Here are the headline eurozone figures:
- Composite PMI: 53.1, up from the flash estimate of 52.9, and ahead of April's 53 reading.
- Services PMI: 53.3, up from the 53.1 flash estimate, and above April's 53.1.
Markit's chart shows just how much Europe is struggling to find substantially, sustainable growth right now. Take a look:
- German Composite: 54.5, up from April's 11-month low of 53.6, but below the expected 54.7.
- German Services: 55.2, up from 54.5 in April to a three-month high.
- French Composite: 50.9, up from 50.2 in April, a six-month high.
- French Services: 51.6, a seven-month high. The April reading was 50.6.
- Italian Services: 49.8, a huge fall from April's 52.1, and well below the 51.1 flash reading.
- Spanish Services: 55.4, up from 55.1 last month, and substantially higher than the 53.5 flash reading.
The PMI figures come just a day after ECB president Mario Draghi struck a dovish tone at the bank's latest meeting, revising medium-term economic forecasts down, and admitting that the bank could get involved in further monetary easing in the coming year to address Europe's low growth cycle.