02-Jun-2025 13:43

The euro area manufacturing sector registered another month-on-month increase in output during May, extending the current run of production growth to three months.

Demand for eurozone goods also showed signs of stabilizing after a sustained period of contraction, while companies were less aggressive with their cutbacks to employment, input purchasing and stocks.

Regarding business sentiment, the latest HCOB survey data showed that firms' confidence rose to its greatest level since February 2022 and was above its historical average.

The HCOB Eurozone Manufacturing PMI, a measure of the overall health of eurozone factories compiled by S&P Global, rose to 49.4 in May, from 49.0 in April, bringing it closer to the 50.0 no-change mark of stabilisation and therefore signalling a further easing of the manufacturing sector downturn. The headline index hit its highest level since August 2022 midway through the second quarter.

Euro area manufacturing output increased again in May, marking three successive monthly expansions. The rate of growth was unchanged from that seen in April and therefore the joint-quickest since March 2022.

Demand conditions were broadly stable midway through the second quarter. Relative to the trend over the past three years, this marked an improvement, as new orders had previously fallen sharply on average since May 2022.

Eurozone goods producers retrenched during May, but they did so to a lesser extent than in recent times. Purchasing activity shrank at the slowest pace seen since the current period of decline began nearly three years ago.

Meanwhile, input costs decreased for a second month in a row during May. Furthermore, the rate of decrease was the quickest in 14 months.

Looking ahead, May survey data showed a pick-up in business confidence across the euro area manufacturing sector. The level of positive sentiment rose to its highest since February 2022 and was above its long-term average.

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