Eurozone economic activity grows at fastest pace in a year in May as Spain consolidates

Demand is driving the eurozone economy, with business activity rising for the third month in a row in May and growth accelerating to its highest level since May 2023. The surge in business activity in Spain is consolidating and reaching its highest levels in 14 months.

He Composite Eurozone Overall Activity Index HCOB PMI stood at 52.2 (51.7 in April) and business confidence reached its highest level in 27 months; according to the Private Economy Indicator released today by S&P Global. The eurozone services HCOB PMI remains at 53.2 (53.3 in April), and inflation is declining but remains above pre-pandemic averages.

The hardest conditions demand They supported growth in production and hiring, and the pace of growth was only slightly slower than the average since the data first became available in 1998.

Of the four major eurozone economies France was an exception in May, as a slight and renewed contraction in private sector activity contrasted with gains in Germany, Spain and Italy. Position Spain as the best performing country consolidating as economic growth strengthens, accelerating to a 14-month high.

The bloc’s largest economy, Germany has also recorded a noticeable economic recovery. and total activity grew at its fastest pace in a year. On the other hand, economic expansion Italy has lost momentum and slowed to its weakest level since February.

Strengthening demand was one of the key reasons for the recovery in overall business activity in the eurozone, especially in services, while the slowdown in industrial orders slowed markedly compared with the previous month.

Overall, growth expectations improved in seven of the past eight months, with positive sentiment at its highest level since February 2022. Eurozone companies increased employment for the fifth month in a row, and growth rates job creation This matched April’s rate, the fastest since June 2023. The services sector has become a driving force again hiring in May as factories cut headcount.

For Prices, inflationary pressure weakens in the middle of the second quarter. However, production cost growth remained sharp and well above the pre-pandemic average. The picture was similar for prices charged, with sales price inflation slowing to a six-month low but remaining significantly higher than the pre-2020 average.

Price pressures in the euro area service sector economy remained elevated despite policy easing. Inflation rates of input and selling prices fell to their lowest levels in three years and seven months, respectively. Looking ahead, expectations for services sector activity over the next twelve months became more positive in May.

The specter of recession is fading

Cyrus de la Rubia, chief economist at the Hamburg Commercial Bank, emphasizes that “the specter of recession is no longer in sight. This is due to the services sector, where the rebound has recently spread.”

“In Germany we can now talk about an upward trend; Meanwhile, business activity in Italy remains stable, and Spain has improved its already strong position. Only France suffered a setback and lost some territory. “Overall, the services sector is likely to drive the eurozone economy’s return to positive growth in the second quarter.”

The Composite PMI, which provides a real-time snapshot of GDP, gives good news for the European Central Bank (ECB). “Services PMI price index components indicate a slight easing in inflation pressures, raising the possibility that the ECB cut interest rates on June 6″.

” moderate inflationary pressure evident both in purchase and sale prices. It is expected that this event will be mentioned in detail at the press conference ECB President Christine Lagarde, in contrast to the unexpectedly high salary increases mentioned in the first quarter. However, they are unusually high in a rather weak economic situation.”