Zona euro Actividad económica May 2023

Zona euro: Business activity expands at softer pace in May

The flash Eurozone Composite Purchasing Managers’ Index (PMI) fell to 53.3 in May from 54.1 in April. Consequently, the index remained above the 50 no-change threshold, signaling another improvement in business conditions compared to the prior month.

May’s decrease was led by a softer expansion in the services sector and a sharper downturn in manufacturing activity. In the services sector, output growth remained strong, albeit slightly softer than in April, as did new orders. Meanwhile, the manufacturing sector experienced sharper declines in output and new orders. Similarly, the pace of job creation decelerated in both the manufacturing sector and the services sector, where it remained robust, nonetheless. Lastly, business confidence weakened.

On the price front, input inflation fell for the third consecutive month thanks to cheaper energy and increasingly abundant supply. Consequently, output inflation decelerated again, although it remained elevated by historical standards, particularly in the services sector.

Commenting on the release, Bert Colijn, senior economist at ING, stated:

“May’s PMI release confirms that concerns about elevated core inflation should centre around services, while goods inflation is set to ease markedly from here on. The economy continues in a ‘muddling through’ phase, as the stagnation seen around the turn of the year has not given way to a strong recovery.”