The final data provided by HCOB showed that activity in the eurozone manufacturing sector increased markedly in May, reaching a 14-month high. Meanwhile, business confidence was above its series average and the highest since February 2022.
Manufacturing PMI rose to 47.3 points from 45.7 points in April. The index remains below 50 points, which indicates a reduction in activity in the sector, since July 2022. Economists had expected the index to rise to 47.4 points.
HCOB said that the manufacturing production fell again in May, but the contract was the softest in just over a year and only marginal overall. Meanwhile, the rate of decline in new orders was the weakest in 2 years. New export sales also declined in May, with the drop being the weakest since May 2022. Backlogs of work continued to be reduced in May as subdued demand conditions led eurozone factories to use outstanding orders as a means to support output. However, the rate of depletion was the weakest since August 2022. Employment in the manufacturing sector also declined amid signs of overcapacity, but the rate of decline was in line with April and was modest. Purchasing activity continued to shrink midway through the second quarter, although the pace of decline was its softest since September 2022. As for the inflationary situation, purchase prices fell again, but at the weakest pace since March 2023. There was a further month-on-month reduction in the price of goods leaving the factory gate across the eurozone.