According to the report from HCOB, business activity in the eurozone private sector continued to expand in May, but the growth rate slowed compared to April (for the first time in 2023) as a slightly softer upturn in services activity combined with the sharpest drop in factory output since last November.
The Eurozone Composite PMI Output Index fell to 52.8 points in May from 54.1 points in April. Overall, the latest upturn in output was moderate, but the slowest in three months. However, the index remained above 50 points, which indicates an expansion of activity. While services activity continued to rise, albeit at a slower rate than in April, factory production volumes fell at the sharpest pace since November. The services PMI fell to 55.1 points from 56.2 points in April, while economists had expected a decline to 55.9 points.
The data showed that total new business inflows almost stagnated in May following the strongest expansion in nearly a year at the start of the second quarter. New export sales continued to have a negative influence during May, falling for a fifteenth month running and at sharper rate than in April. Meanwhile, the rate of job creation, albeit weaker than in April, was solid and faster than seen across the series average. The number of outstanding orders decreased again in May, while the rate of backlog depletion was slightly faster than in April. The data also pointed to further cooling of cost pressures across the eurozone. Meanwhile, firms’ assessments towards the 12-month outlook for business activity remained positive during May, but the level of confidence eased to a five-month low.