May data signalled a modest acceleration in the rate of expansion of the eurozone manufacturing sector. The final seasonally adjusted Eurozone Manufacturing PMI® posted 52.2, matching March’s ten-month high but coming in just below the earlier flash estimate of 52.3.
Manufacturing production expanded again in May, extending the current sequence of growth to 23 months. Although the rate of increase ticked lower, it was still among the fastest seen over the past year. The trends in both total new orders and new export business both improved, suggesting output growth should be sustained in the coming months.
New business and new export orders both rose at the fastest rates in just over a year. The improved level of demand encouraged firms to take on additional staff, leading employment to rise for the ninth month running. Part of the increase in jobs reflected rising levels of outstanding business. Of the remaining countries for which data were available, Spain, the Netherlands and Italy were the leading lights. Germany and Austria saw modest expansions and France a further contraction.
Output and new orders in Spain rose at the quickest pace since 2007, underpinned by the strongest gain in new export business for 15 years. Production and new order growth in Italy was the fastest in over four years, while accelerations were also signalled for the Netherlands. All three of these nations registered solid job creation.
Output growth in Germany slowed sharply to a five-month low in May. The rates of increase in both total new business and new export orders also remained muted, in turn slowing the pace of job creation. Austria saw a modest acceleration in output growth, despite a slight decrease in new orders, and further headcount reductions.
The downturn in production at French manufacturers was extended to 12 months in May. New orders and employment also both fell, but there was a mild pick up in new export orders received.
Cost pressures remained on the upside in May, as input prices rose for the third month running and to the greatest extent since April 2012. The euro exchange rate and recent oil price increases both contributed to the latest rise in costs. Input price inflation was recorded in all of the nations except Austria, with accelerations signalled in each of the ‘big-five’ countries (Germany, Italy, France, Spain and the Netherlands).
Meanwhile, average output charges were unchanged since April. Increases were signalled in Germany, Italy and Spain, while French, Dutch and Austrian manufacturers all reduced their average selling prices.
