Eurozone PMI May 2016


Composite PMI inches down to 16-month low

Recent data suggest that business activity in the Euro area slightly lost momentum in May. The preliminary Eurozone Composite Purchasing Managers’ Index (PMI), elaborated by Markit, inched down from a 53.0 in April to 52.9 in May. The result undershot market analysts’ expectations of an improvement to a 53.2 reading and marked the lowest reading since January 2015.

The fall in May reflected a downturn in services growth while conditions in the manufacturing sector remained steady. New business activity grew at the slowest pace since January 2015. In addition, manufacturing output growth and new orders slowed. On the bright side, employment rose for the 19th consecutive month.

Regarding the two largest Eurozone economies, economic conditions improved in France and Germany. In France, economic output grew at the fastest pace seen in over six-months and both the manufacturing and services PMIs for Germany improved. However, the gains made in the two largest economies were offset by a weakening in economic conditions elsewhere in the region.

The European Central Bank (ECB) expects the Eurozone economy to expand 1.7% in 2016 and to pick up further to 1.9% growth in 2017. FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 1.5% in 2016, which is unchanged from last month’s forecast. For 2017, panelists expect the economy to expand 1.6%.

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Eurozone PMI Chart

Euro PMI May 2016

Note: Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction
Source: Markit

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