Financial News: Eurozone Manufacturing Activity Contraction Slows

Eurozone Manufacturing Activity Contraction Slows

06/02/2025 - 09:38:00 (RTTNews)

(RTTNews) - Euro area factory activity fell at the slowest pace in more than two years in May, signaling a gradual progress towards recovery, final results of the purchasing managers' survey from S&P Global showed on Monday.

The HCOB final manufacturing Purchasing Managers' Index rose to 49.4 in May, in line with the flash estimate, from 49.0 in April. The score came closer to the no-change mark of 50 suggesting stabilization and also hit its highest level since August 2022.

The upward trend in the headline PMI is still continuing, pointing towards a recovery that is progressing, Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

The industrial sector has started cutting its sales prices again after two months of increases, giving the central bank some extra room to move on with its interest rate cuts, de la Rubia noted.

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

Regarding business sentiment, the PMI survey data showed that firms' confidence rose to its greatest level since February 2022.

In the big-four economies, German manufacturers reported a third monthly rise in output in May, but overall business conditions remained weak. The HCOB factory PMI registered 48.3, down from April's 32-month high of 48.4. The flash reading for May was 48.8.

Spain posted a renewed expansion in factory activity after three months of deterioration. The manufacturing PMI advanced to 50.5 in May from 48.1 in the previous month.

The French industrial economy almost stabilized, with its manufacturing PMI rising to a 28-month high. The index logged 49.8, which was only fractionally below the threshold and up from April's 48.7. The reading was above the flash estimate of 49.5.

Meanwhile, the downward trend continued in Italy. The manufacturing PMI dropped slightly to 49.2 from 49.3 in April.

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