Eurozone: PMIs indicate that re-acceleration in growth isn’t happening - ING
|Peter Vanden Houte, Chief Economist at ING, notes that the flash Eurozone PMI Composite Output Index declined to 54.1 in May from 55.1 in April, undershooting consensus expectations.
Key Quotes
“Both the Services PMI Activity Index (53.9) and the Manufacturing PMI Output Index (54.5) are now at their lowest level in more than a year.”
“Input cost inflation accelerated to a three-month high on the back of higher fuel and energy prices, while in some countries wage pressures are starting to show. But this is squeezing margins rather than increasing inflation as average selling prices for goods and services rose at the slowest rate since September 2017. Companies have mentioned difficulties in hiking prices because of weak final demand.”
“It has been repeated ad nauseam that first-quarter growth in the Eurozone has been slowed by temporary factors like bad weather, the timing of the Easter holidays, a flu epidemic and strikes.”
“To be sure, the current level of the PMI is still compatible with quarter-on-quarter GDP growth of about 0.4%. However, some challenges remain. The high oil prices sapping consumer purchasing power, the still not revolved trade issues with the US and the potential financial market tensions the new Italian government might provoke could all weigh on growth in the coming quarters.”
“We still expect GDP growth to come in at 2.2% this year, but one senses that the growth momentum is more likely to slow rather than accelerate again. In 2019, expect growth to fall back to 1.8% at best.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.