low angle shot of manufacturing plant under blue sky

Eurozone Manufacturing PMI Contracts Further in May as Demand Declines

Eurozone’s manufacturing sector experienced a continued decline in May, primarily driven by reduced demand. Although factories responded to the challenging conditions by cutting prices for the first time since September 2020.

The final Purchasing Managers’ Index (PMI) for the manufacturing sector in May, collected by S&P Global on June 1, stood at 44.8, slightly higher than the preliminary PMI of 44.6 but lower than April’s 45.8. Importantly, the figure remains below the critical threshold of 50, indicating the 11th consecutive month of contraction in manufacturing activity.

The Productivity Index, which combines the PMIs of the manufacturing and services sectors, dropped to a six-month low of 46.4 in May compared to 48.5 in March.

The chief economist of Hamburg Commercial Bank highlighted that “weak demand in manufacturing has compelled companies to reduce production for the second consecutive month.” The ongoing contraction in manufacturing activity underscores the challenges faced by the sector, which is grappling with sluggish demand and cautious market sentiment.

Efforts to revive manufacturing activity and stimulate demand will be crucial in supporting the Eurozone’s economic recovery. Policymakers and businesses will closely monitor these developments and consider appropriate measures to address the underlying factors contributing to the decline in manufacturing and seek opportunities for growth in the sector.

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