Latest eurozone PMI points to slowdown

21st May 2015

The latest economic indicators from the eurozone suggest growth across the currency union has slowed back down after the slight pick-up in the first three months of the year.

May’s flash eurozone purchasing managers’ index (PMI) survey shows a fall in the composite PMI from April’s 53.9 to 53.4.

Capital Economics, chief European economist Jonathan Loynes
noted that given past form, the survey is now consistent with quarterly gains in GDP of around 0.3%, a touch smaller than first quarter’s 0.4%.

Sector-wise, the manufacturing index edged up from 52.0 to 52.3. This was driven in part by a rise in the export orders index to 53, its highest level for over a year, suggesting that the drop in the euro is starting to have some beneficial effects.

Loynes pointed out however that the services index fell from 54.1 to 53.3, its lowest reading since January, indicating that domestic demand is losing some steam again, perhaps due to uncertainties over the Greek situation.

He added: “We only have country data for France and Germany at this point. France’s composite index edged up from 50.6 to 51.0 but still points to much weaker growth in Q2 than the 0.6% gain seen in Q1. Meanwhile, Germany’s index fell from 54.1 to 52.8, the lowest since December, mirroring the renewed declines in other recent surveys like the ZEW and Ifo. Overall, another warning that the euro-zone economy is set to remain too weak to allow the peripheral countries to grow their way out of their debts.”

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