Euro-Area Manufacturing Remained Stuck in Its Slump in May
Factory output in the euro area fell close to a six-year low in May, with slumping orders and declining workforces signaling a bleak outlook for demand.
A Purchasing Managers’ Index came in at 47.7, down from April’s reading and matching a flash estimate. Weakness was concentrated in the intermediate and investment goods sectors, according to the report, while consumer goods continued to expand.
The data underscores a picture of an economy that is struggling to emerge from a slowdown that has lasted more than a year. European Central Bank policy makers -- who have predicted a rebound in the second half of 2019 -- will meet this week and offer their latest assessment of how much stimulus is needed to keep the euro-area economy on track.
“Companies are tightening their belts, cutting back on spending and hiring,” said Chris Williamson, chief business economist at IHS Markit, which publishes the report. “Input buying, inventories and employment are all now in decline as manufacturers worry about being exposed to a further downturn in demand.”
Williamson added that the drop in the manufacturing index masked slower rates of decline in output and new orders, as components like employment drove the overall deterioration. There are still signs “for the downturn to moderate in June,” he said.
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