Title: Euro zone business growth slowed in May but stayed resilient –PMI
May 24, 2022 04:35AM ET
A preliminary survey revealed on Tuesday that business growth in the euro zone slowed this month but remained strong as the cost-of-living crisis hurt consumer spending power and a shortage of raw materials slowed expansion in the manufacturing sector.
The S&P Global Composite Purchasing Managers' Index (PMI), considered a good indicator of overall economic conditions, fell to 54.9 in May from 55.8 in April, below the 55.3 forecast in a Reuters poll.
Any reading above 50 indicates growth.
The services PMI fell to 56.3 in May from 57.7, well below the 57.5 forecast in the Reuters poll, as surging prices made some consumers cautious.
Demand for services weakened-the new business sub-index fell to 55.2 from 56.6-but firms added staff at a faster pace than in April.
The flash manufacturing PMI fell to 54.4 this month from 55.5, worse than the 54.9 forecast in a Reuters poll and the lowest since November 2020, but the production index, which is included in the composite PMI, rose to 51.2 from 50.7.
Renewed COVID-19 suspensions in China and Russia's invasion of Ukraine disrupted supply chains just recovering from the pandemic, driving up costs and limiting access to raw materials.
Both manufacturing input and output prices remained high, and plant managers passed on rising material costs to customers. The producer price index fell only slightly from April's record high (77.3) to 76.0.
Eurozone inflation hit a record 7.4% in April, official data showed last week, and a recent Reuters poll of economists predicted the European Central Bank would raise its deposit rate in July.
The index of future economic performance, which measures expectations for the year ahead, fell to 59.6 from 60.5, its lowest level since July 2020, suggesting momentum could slow further.