The euro area PMI data hinted at a further slowdown of growth in the manufacturing sector, as new business inflows from export and domestic markets continued to grow at weaker rates. Markit Eurozone Manufacturing PMI dropped in May to a three month low of 51.5 from April’s 51.7. It was unchanged from the flash estimate.
Out of the eight countries in the euro area manufacturing survey, six of them recorded growth in May. The Netherlands and Germany were the only nations to register the most rapid rates of growth. Italy’s manufacturing sector’s growth slowed to a three-month low, whereas growth in Ireland and Spain was the weakest since July 2013 and October 2015 respectively, noted Markit. The PMI index of Austria was unchanged at 52. Meanwhile, the readings for Greece and France continued to be below the threshold. Both the countries posted a reading of 48.4.
Manufacturing production in the euro area rose for the 35th consecutive month. The slowdown in output growth was due to a subdued rise in new work received. The rate of rise in new business slowed down to a 15-month low. According to panellists, the conditions continued to be quite competitive in export as well as domestic markets. New export business grew at the slowest rate since January 2015.
New export business growth was seen only in Spain, Germany, the Netherlands and Italy; however, at a slower rate as compared to the prior month. The readings for May gave additional evidence of price discounting to underpin sales attempts and fight competitive pressures. Average selling prices declined for the ninth consecutive month. No nations included in the survey registered a rise. But the charge deflation rate slowed further to a five-month low.
Meanwhile, average purchasing costs declined for the tenth straight month in May. But the pace of decline slowed down, partially reflecting the recent strengthening of some commodity prices, particularly oil. Employment in euro area manufacturing grew, while the pace of job growth slowed marginally and was a tad lower than the average.
Staffing levels, consistent with the production trend, grew in all the countries covered, with an exception for France and Greece. Employment in Greece declined slightly, while France registered the sharpest job cuts since August 2014, noted Markit. The Netherlands was the only nation amongst the ones reporting a rise with an enhanced pace of growth.
