Eurozone Composite Purchasing Managers' Index (PMI) produced by IHS Markit slowed to the lowest level over the past year and a half in May 2018. According to experts, the trend observed in new orders signals unfavorable economic prospects.
Last month, the index that tracks business trends across both manufacturing and service sectors in 19 eurozone countries dropped to 54.1 from 55.1 in April 2018. This was the lowest reading since November 2016.
The figure below 50 reflects a decline in activity, while the reading above means growth. The indicator points to an increase in business activity for 59 months in a row. The slowdown in business activity growth has been recorded in both manufacturing and services sectors.
In Spain, the index increased to its highest in three months, while in France and Germany it slowed to the lowest level in 16 and 20 months, respectively. Last month, the euro area witnessed the lowest level of new orders. At the same time, production capacity has been weighed down significantly, experts say.
Euro area business sentiment also deteriorated in May 2018. The optimism indicator fell to the lowest level in a year and a half. At the same time, the growth of input prices accelerated for the first time in four months. A similar trend was observed in Germany, France and Spain.
According to Eurostat, the GDP in 19 eurozone countries grew by 0.4% in the first quarter of this year. GDP growth in January-March 2017 was 2.5%. However, IHS Markit’s outlook for the eurozone worsened sharply compared to the optimistic forecast made earlier this year.
