trending Market Intelligence /marketintelligence/en/news-insights/trending/375coyzt23elxgzeq-_1xw2 content esgSubNav
In This List

Eurozone economic activity falls to 1.5 year low in May, IHS Markit says

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Eurozone economic activity falls to 1.5 year low in May, IHS Markit says

Economic activity in the eurozone decreased to its lowest level in a year-and-a-half in May and service sector activity declined to a 16-month low, indicating the second quarter could be the region's weakest since 2016, final purchasing managers' data showed.

The final IHS Markit eurozone composite output index fell to 54.1, in line with a flash estimate and down from 55.1 in April. The rate of growth of output, new orders, backlogs and employment slowed from the previous month, while business optimism decreased to its lowest level in one-and-a-half years.

"The pace of eurozone economic growth sank to a one-and-a-half year low in May, and has now slowed continually since January's peak to suggest that the region is on course for its worst quarter since 2016," Chris Williamson, chief business economist at IHS Markit, said.

New business growth eased to an 18-month low, with the rate of increase declining in Germany, France, Italy and Spain. Spain was the only country to report an improvement in its pace of expansion among the big four. Input cost inflation accelerated for the first time in four months, while average output charges increased at their slowest pace so far this year.

The final services business activity index for the eurozone came in at 53.8 for May, lower than the flash estimate and down from 54.7 in April. The slowdown of service sector growth reflected weakening expansions in France and Germany and slight accelerations in Italy and Spain.

"The survey signals GDP growth of 0.4-0.5% for the second quarter, but there is much uncertainty as to whether the pace will continue to weaken in coming months," Williamson said.

Manufacturing PMI data showed growth in the eurozone's manufacturing sector fell to its lowest level in 15 months in May.

"With the economic indicators turning down at the same time as political uncertainty has spiked higher, the eurozone's outlook has darkened dramatically compared to the sunny forecast seen at the start of the year," Williamson said.

The final composite output index for Germany fell to a 20-month low of 53.4 in May, slightly higher than the flash estimate and down from 54.6 in April. France's composite index France came in at 54.2, lower than the flash estimate and down from 56.9 in April. Italy's composite output index was unchanged at 52.9 in May.