• Flash Eurozone composite PMI fell to an 18-month low of 54.1  in May, down from 55.1 in April. 
  • The manufacturing PMI in Germany fell to the lowest level in 15 months of 56.8 in May compared with 58.1 in April while services decelerated to a 20-month low of 52.1 in May compared with 53.0 in April.
  • With the economic activity slowing down and inflation well below the ECB target, the asset purchasing program is likely to be prolonged until the end of this year. 

The economic activity in the Eurozone decelerated further in May with manufacturing PMI falling to the lowest level in last 15 month at 55.5 in May, compared to 56.2 in April and the services PMI falling to a 16-month low of 53.9 in May, down from 54.7 in April. The deceleration in the Eurozone was affected mainly by development in Germany as manufacturing activity in France actually increased in May.

While deceleration at the beginning of this year was affected by adverse weather conditions, earlier Easter, and strikes in some countries, deceleration in May was affected by the unusually high number of public holidays.

“Furthermore, despite the headline PMI dropping to an 18-month low, the survey remains at a level consistent with the eurozone economy growing at a reasonably solid rate of just over 0.4% in the second quarter,” Chris Williamson, Chief Business Economist at IHS/Markit wrote in the PMI report for the Eurozone.

Even with the disappointing reading of May PMI, job creation in the Eurozone remains robust and optimism about the business outlook remains above its long-term average.   

Still, the economic activity in the Eurozone remains well off the cyclical high from the turn of this year with the number of external factors including fear of trade wars and rising oil prices weighing on the sentiment for the Eurozone businesses.

Should the deceleration in May be confirmed by the final reading at the beginning of June, the ECB is likely to remain even more hesitant to end its asset purchasing program in September with the most likely scenario of the reduced asset purchasing being prolonged until the end of this year.

The composite PMI for Eurozone


 

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD retreats below 1.0650 on renewed USD strength

EUR/USD retreats below 1.0650 on renewed USD strength

EUR/USD came under modest bearish pressure and declined below 1.0650 in the European session on Monday. The renewed US Dollar strength doesn't allow the pair to gain traction as focus shifts to ECB President Lagarde's speech.

EUR/USD News

GBP/USD drops to fresh five-month lows, closes in on 1.2300

GBP/USD drops to fresh five-month lows, closes in on 1.2300

GBP/USD extends its slide toward 1.2300 and trades at a fresh five-month low in the European session on Monday. The cautious market stance helps the US Dollar stay resilient against its rivals and weighs on the pair ahead of Tuesday's key PMI data.

GBP/USD News

Gold drops to one-week low below $2,350

Gold drops to one-week low below $2,350

Gold stays under heavy bearish pressure and trades at its lowest level in a week below $2,350. The benchmark 10-year US Treasury bond yield stays in positive territory above 4.6%, forcing XAU/USD to stay on the back foot.

Gold News

XRP jumps above $0.50 as Ripple is set to file opposition brief in SEC lawsuit

XRP jumps above $0.50 as Ripple is set to file opposition brief in SEC lawsuit

XRP price climbed to a high of $0.54 on Monday, hours before Ripple files its response to the Securities and Exchange Commission (SEC) remedies-related opening brief. 

Read more

Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium

Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out

While it is hard to predict when geopolitical news erupts, the level of tension is lower. This week's US figures are set to shape the Fed decision next week – and the BoJ may struggle to halt the Yen's deterioration. 

Read more

Majors

Cryptocurrencies

Signatures