Eurozone manufacturing growth slows to 18-month low
By Michele Maatouk
Date: Wednesday 01 Jun 2022
(Sharecast News) - Eurozone manufacturing growth fell to an 18-month low in May, with orders down for the first time in nearly two years amid inflationary pressures.
The S&P Global eurozone manufacturing purchasing managers' index declined to 54.6 from 55.5 in April. A reading above 50.0 indicates expansion while a reading below signals contraction.
New orders fell for the first time since June 2020 amid an ongoing supply crunch and prices pressures, with producers of many goods and raw materials lifting their prices again as energy prices surged.
The survey also found that business confidence was among the lowest seen over the past two years amid sustained concerns surrounding the outlook for prices, supply chains and demand.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "Euro area manufacturers continue to struggle against the headwinds of supply shortages, elevated inflationary pressures and weakening demand amid rising uncertainty about the economic outlook.
"However, the manufacturing sector's deteriorating health has also been exacerbated by demand shifting to services, as consumers boost their spending on activities such as tourism and recreation.
"The survey's output gauge is indicative of official manufacturing production falling slightly so far in the second quarter, and forward-looking indicators such as the orders-to-inventory ratio suggest the rate of decline will accelerate in coming months, absent a sudden revival of demand for goods. The eurozone economy therefore looks increasingly, and uncomfortably, dependent on the service sector to sustain growth in the coming months."
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