Eurozone Manufacturing Growth At 18-Month Low

The Eurozone manufacturing sector grew at the slowest pace in one-and-a-half years in May amid supply shortages, high inflationary pressures and weakening demand, final data from S&P Global showed on Wednesday.

The final factory Purchasing Managers’ Index fell to 54.6 from 55.5 in April. The score was slightly above the flash 54.4.

Manufacturing new orders decreased for the first time since June 2020. Demand remained weak in May, impacted by the war in Ukraine, pandemic related-restriction and elevated prices.

Although output growth picked up marginally from April’s recent low, it remained sluggish.

Manufacturers added to their stocks of purchases at the quickest pace in three months. But the rate of growth in purchasing activity was unchanged from April’s 17-month low.

Data showed that cost pressures in manufacturing firms increased in May. Input prices increased at one of the fastest pace on record. Overall, output price inflation was the second-strongest in the series.

Concerns surrounding the outlook for inflation, demand and supply chains anchored business confidence at a relatively subdued level.

Among big-four economies, Germany and Spain registered stronger improvements in May.

Germany’s manufacturing growth strengthened in May as output returned to growth after a decline. The final manufacturing PMI rose slightly to 54.8 from a 20-month low of 54.6 April. The flash reading was 54.7.

Meanwhile, slowdown in demand growth weighed on French factory output in May. The final manufacturing PMI fell to 54.6 from 55.7 in April but was above the preliminary reading of 54.5. This was the lowest since October 2021.

Italy’s manufacturing output decreased for the first time in two years. The manufacturing PMI declined notably to 51.9 from 54.5 in April. The score was forecast to drop moderately to 53.5.

Despite lack of sales growth in May, Spain’s production increased from the previous month. The manufacturing PMI rose to 53.8 in May compared to 53.3 in April.

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