Flash PMIs for the euro area for the month of May came in somewhat weaker than anticipated. Markets had expected the PMIs to slightly rebound for services as well as manufacturing, but the PMI for manufacturing dropped slightly and for services stayed at April’s level. However, the picture for PMI was mixed as France and Germany both recorded upbeat data.
The negative surprises were just minor changes, and do not lead to any alterations in the projection of the GDP growth, said Nordea Bank in a research note. The composite PMI on output corroborates the projection of 0.3% q/q growth in Q2 2016, added Nordea Bank.
PMIs for France and Germany came in higher than the market expectations. The upbeat data was mainly seen in the services side. Both the nations have a rather high level of service PMIs. This shows that the economies’ GDP will continue to expand in the near term, according to Nordea Bank.
But, manufacturing is struggling, particularly in France where the flash PMI remains below 50. This verifies the overall slowdown in global manufacturing. Also, it seems likely that the subdued growth in world trade has carried into the spring.
