Eurozone Private Sector Logs Strong Growth In May

Eurozone Private Sector Logs Strong Growth In May

June 6, 2022

Eurozone private sector expanded strongly in May as the relaxation of the Covid-19 restrictions boosted services growth, while the expansion in manufacturing output was damped by the war in Ukraine and supply-side disruptions.

The final composite output index dropped to a four-month low of 54.8 in May from 55.8 in the previous month, survey results from S&P Global showed on Friday. The flash score was 54.9.

Despite service sector resilience, there was an overall loss of momentum within the sector, leading private sector output to grow at the weakest pace since January.

At 56.1, the services Purchasing Managers’ Index dropped from 57.7 in April. The score was below the flash 56.3. Although the index declined from April, this was the second-fastest expansion in services output since last September.

The survey suggested that the eurozone is expanding at an underlying rate equivalent to GDP growth of just over 0.5 percent, Chris Williamson, chief business economist at S&P Global Market Intelligence, said.

The near-term fate of the eurozone economy will depend on the extent to which a fading tailwind of pent-up demand can offset the headwinds of geopolitical uncertainty amid the Ukraine war, supply chain disruptions and the rising cost of living, the latter likely exacerbated by tightening monetary conditions, Williamson added.

Slowdowns were more or less broad at a country level during the latest survey period, with Spain the only exception as the rate of growth here was unchanged since April.

There was a sustained loss of momentum in Germany’s private sector in May. The final composite output index slipped to 53.7 from 54.3 in April. The flash reading was 54.6.

The final services PMI registered 55.0 in May, down from 57.6 in April. This was the lowest score for four months and the flash 56.3.

France’s private sector continued to expand in May amid resilient demand for services. Nonetheless, the final composite output index dropped to 57.0 in May from April’s 51-month high of 57.6. The preliminary score was 57.1.

The services PMI posted 58.3 in May, down slightly from April’s 51-month high of 58.9. The score was marginally below the flash 58.4.

Private sector growth in Spain was unchanged in May. The composite PMI held steady at 55.7 in May. The services PMI registered 56.5 in May, down from 57.1 in April.

At the other end of the spectrum, Italy was the worst performer and recorded a modest expansion in private sector output.

Italy’s composite output index fell to 52.4 in May from 54.5 in April, to signal a sixteenth successive rise in Italian private sector output. The services PMI declined from 55.7 in April to 53.7 in May.

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