Preliminary May services PMI 53.3 vs 53.3 in April (Il Sole 24 Ore Radiocor) - London , 23 May - The eurozone's purchasing managers' index for the manufacturing sector in May rose to a 15-month high of 47.4 in May from 45.7 in April, while that for the services sector stood at 53.3, unchanged compared to April, according to preliminary data released by S&P Global and the Hamburg Commercial Bank.

The manufacturing PMI output index rose to 49.6 from 47.3 in April, a 14-month high. The composite PMI output index, a weighted average of manufacturing output and services PMI, was at a 12-month high of 52.3 against 51.7 the earlier month.

A reading below 50 signals contracting sector activity, while one above an expansion.

'This looks as good as it could be," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. "The PMI composite for May indicates growth for three months straight and that the eurozone's economy is gathering further strength. Encouragingly, new orders are growing at a healthy rate while the companies' confidence is reflected by a steady hiring pace. This time, there is also some good news for the European Central Bank (ECB) as the rates of inflation for input and output prices in the services sector has softened compared to the month before. This will be supportive for the apparent stance of the ECB to cut rates at the meeting on June 6. However, the better inflation outlook will be most probably not be enough for the central bank to announce that further rate cuts will follow suit.

'We are heading in the right direction. Considering the PMI numbers in our GDP nowcast, the Eurozone will probably grow at a rate of 0.3% during the second quarter, putting aside the spectre of recession. Growth is mainly driven by the service sector whose expansion was extended to four months.

Manufacturing acts less and less as a stumbling block for the economy and optimism about future output has increased further in this sector. With all this in place it seems plausible that GDP growth of almost 1% could be reached this year, and there is even some upward risk.

'Looking for the fly in the ointment? Well, you will find plenty of them, especially in the manufacturing sector. While manufacturers have almost stopped reducing their production levels, inventories of purchased goods and final goods continue to shrink at even faster paces than during the last month. And while the indices for new orders, employment and backlogs of work have all increased, they are still well below the expansionary threshold. Thus, according to our Nowcast calculation, which considers the PMI indices, the recession in the manufacturing sector remains present in the current quarter.".

AAA-Hob

(RADIOCOR) 23-05-24 10:12:29 (0259) 5 NNNN