Euro Area's manufacturing PMI continued to head down in May

Business activity in Euro Area's manufacturing sector kept decelerating in April, but stayed above 50, meaning that it is still expanding. The S&P Global Manufacturing Purchasing Managers' Index (PMI) decreased to 54.4 from 55.5. This is the fourth straight month in which the indicator declines from as high as 59 at the beginning of this year.

The S&P Global PMI decreased to 54.4 from 55.5

The data breakdown reveals that employment improved in May, with the corresponding indicator inching up to 55.9 following 55.2 in April. The supplier's delivery times component continued to recover to 29.9 in May after plunging to 25.1 in March when businesses were disrupted because of the war in Ukraine. The component, however, is still well below the 50 and at historically low levels, reflecting the supply chain disruptions, observed globally since the start of the pandemic. The new orders index dropped below 50 for the first time since mid-2020. The new export orders index also fell in May to 46.8 only. Pressure on the demand side is mounting.

Input and output prices both slightly went down in May, however, they are still at a very high level, suggesting continued inflationary pressures, resulting from both the supply chain crunch and the elevated energy prices.

The PMI index has a threshold level of 50, which divides contraction from expansion. Access more charts here