Eurozone manufacturing at 'turning point' as downturn eases in May

3rd Jun 2024 09:45

(Sharecast News) - The contraction in manufacturing activity in the eurozone eased slightly less than expected in May, according to revised estimates on Monday by S&P Global and Hamburg Commercial Bank (HCOB), which signalled a "turning point" for the sector.

The final estimate for the eurozone manufacturing purchasing managers' index (PMI) showed a reading of 47.3 for last month.

While this was still firmly below the key 50-point level which separates expansion and contraction - a level not surpassed since June 2022 - this was up from 45.7 in April, though slightly below the preliminary estimate of 47.4 released two weeks ago.

Nevertheless, this was still the third straight month of improvements in the index and the highest reading since March 2023, showing the slowest rate of decline in more than a year.

Manufacturing PMIs improved across the majority of countries covered by the survey, with heavyweights Germany and France both seeing contractions ease, and Spain and the Netherlands experiencing an acceleration in growth.

"This could be the turning point for the manufacturing sector. The industry is on the verge of halting the production decline that has persisted since April 2023," said Cyrus de la Rubia, HCOB's chief economist.

"This is largely supported by more favourable trends in intermediate and capital goods. Additionally, more companies are reporting positive developments in order intakes from both domestic and international markets, although this is still being offset as a larger proportion saw declines in May. Encouragingly, business confidence regarding future production is at its highest level since early 2022."