Euro zone factories struggled in May as consumers switched to leisure activities
Reuters
Published Jun 01, 2022 04:33AM ET
Updated Jun 01, 2022 07:25AM ET
LONDON (Reuters) - Manufacturing growth in the euro zone slowed last month as factories faced supply shortages, high prices and a fall in demand, according to a survey which suggested consumers were switching their spending to tourism and recreation.
S&P Global (NYSE:SPGI)'s final manufacturing Purchasing Managers' Index (PMI) fell to 54.6 in May from April's 55.5, its lowest since November 2020, but did come in ahead of a preliminary reading of 54.4. Anything above 50 indicates growth.
An index measuring output, which feeds into a composite PMI due on Thursday and seen as a good gauge of economic health, nudged up to 51.3 from 50.7.
"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," said Chris Williamson, chief business economist at S&P Global.
"However, the manufacturing sector's deteriorating health has also been exacerbated by demand shifting to services."
As economies have reopened following the coronavirus pandemic citizens have are enjoying vacations and recreational activities again, S&P Global said.
The May flash services PMI dipped to 56.3 from 57.7, however, suggesting growth also slowed in that sector.
Supply chains only just healing from the pandemic have meanwhile been damaged by the war in Ukraine and factories are having to pay higher costs for the raw materials they need, some of which they have passed on to consumers, weakening demand.
Euro zone inflation rose to a record high of 8.1% in May, official data showed on Tuesday and the new orders PMI fell to 48.7 last month from 51.6, its first time below the breakeven 50 mark since June 2020.
"A major driver of the first drop in new orders for almost two years was the ongoing supply crunch and accompanying price pressures, with producers of many goods and raw materials raising their prices yet again alongside a recent surge in energy prices," Williamson said.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.