Eurozone economy in the doldrums in May
Eurozone economic growth was in the doldrums in May as services weakened and optimism dropped to a near five-year low.
Economic activity in the currency area was little changed at 51.6 compared with 51.5 a month earlier, according to the IHS Markit purchasing managers' index. A figure above 50 shows activity growing.
Service activity was at a four-month low of 52.5, down from 52.8 the month before. Manufacturing output contracted for the fourth month running, registering a score of 49.0.
The results painted a bleak picture for the eurozone's prospects. Job growth equalled a low not seen since 2016 as business's deferred expansion due to weak sales. Optimism about the future slumped to the lowest for four and a half years while new business barely grew and new export orders fell.
Chris Williamson, IHS Markit's chief business economist, said: “A renewed deterioration in optimism about the year ahead suggests that the business situation could deteriorate further in coming months. Worries reflected concerns over lower economic growth forecasts, signs of weaker sales and rising geopolitical uncertainty, with escalating trade wars and auto sector woes commonly cited as specific causes for concern."
Growth edged higher in Germany, suggesting a partial continuation of the trend in the first quarter reported in official figures. But new orders fell in May and IHS Markit said its survey suggested German GDP growth would weaken to 0.2% in the second quarter from 0.4% in the first.
France's economy also picked up in May but a gloomy outlook suggests first-quarter growth of just 0.1%. Elsewhere in the eurozone business activity grew at its weakest pace since November 2013 as new business fell for the first time in almost six years.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The details are generally depressing reading … The hard data have so far been much better than this overall sombre message, but we suspect that second-quarter numbers will come in more closely with the surveys."