By Mucahithan Avcioglu
ISTANBUL (AA) - The downturn in the eurozone's manufacturing sector eased further in May, with the purchasing managers' index (PMI) rising to a 33-month high.
The Hamburg Commercial Bank (HCOB) PMI rose to 49.4 points in May, from 49 in April, according to data released on Monday.
The markets expected the figure to fall to 48.4 points for last month.
However, the PMI has remained below the threshold level of 50 points since July 2022. Above 50 points indicates sectoral growth, while below indicates contraction.
The manufacturing output index posted the third consecutive monthly rise in May. "The rate of growth was unchanged from that seen in April and therefore the joint-quickest since March 2022. That said, the upturn was only modest overall," a report from S&P Global said.
"Demand conditions were broadly stable midway through the second quarter. Relative to the trend over the past three years, this marked an improvement, as new orders had previously fallen sharply on average since May 2022," it noted.
Employment posted a decline in May again, though at the slowest pace since September 2023.
On the price inflation side, input costs fell for the second month in a row in May. Meanwhile, there was evidence of companies passing on cost savings to their clients as output charges were discounted for the first time since February, it said.
"In May, Europe’s industrial engines seemed to be running in sync. Production rose in Germany, France, Italy, and Spain, suggesting that shared factors are driving the upswing. Among them is the US tariffs, which likely prompted US buyers to place orders early. That said, France has not benefited from this trend as much as its peers," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
"Meanwhile, lower interest rates and falling oil and gas prices are giving the entire sector some breathing room. Looking ahead, German companies are expected to outpace their European peers, thanks in large part to the new government’s expansionary fiscal policies," he added.
The eurozone/euro area, or EA20, represents member states that use the bloc's single currency, the euro.