Eurozone
“flash”
estimates
for
purchasing
managers’
indexes (PMI)
have
been
released
today,
May
23.
They
are
initial
estimates
for
the
current
month
that
are
subject
to
revision.
The
eurozone
economy
gathered
pace
in
May,
according
to
provisional
PMI
survey
data
provided
by
S&P
Global.
Wage
data
for
the
euro
area
was
also
released
by
the
European
Central
Bank,
which
is
still
expected
to
cut
interest
rates
when
it
next
meets
on
June
6.
The
seasonally
adjusted
HCOB
Flash
Eurozone
Composite
PMI
Output
Index
rose
from
51.7
in
April
to
52.3
in
May,
higher
than
the
FactSet
consensus
of
52,
and
above
the
line
that
marks
expansion
from
contraction
(50).
“Faster
increases
in
business
activity,
new
orders
and
employment
were
all
recorded
midway
through
the
second
quarter,
while
business
confidence
hit
a
27-month
high,”
said
S&P
in
a
note.
The
main
contributor
in
the
eurozone
came
from
the
service
sector,
as
the
HCOB
Flash
Eurozone
Services
PMI
Business
Activity
Index
was
unchanged
from
April
at
53.3,
slightly
below
consensus
(53.5).
The
manufacturing
PMI
Index
surprised
on
the
upside,
coming
in
at
47.4
against
an
expectation
of
46.1,
reaching
a
15-month
high.
However,
it
is
still
below
the
line
that
marks
expansion
from
contraction.
Manufacturing
production
continued
to
fall,
but
the
rate
of
contraction
was
marginal.
Will
the
ECB
Cut
Rates
on
June
6?
May’s
flash
eurozone
PMI
indexes
also
contained
some
pointers
for
the
European
Central
Bank
(ECB)
as
it
prepares
to
meet
next
month.
The
rate
of
inflation
of
both
input
costs
and
output
prices
softened
from
April,
although
remaining
above
pre-pandemic
averages
in
each
case.
Once
again,
the
service
sector
was
the
biggest
source
of
inflationary
pressures,
but
the
rate
of
rises
eased
to
a
three-year
low.
“This
time,
there
is
also
some
good
news
for
the
European
Central
Bank
(ECB)
as
the
rates
of
inflation
for
input
and
output
prices
in
the
services
sector
has
softened
compared
to
the
month
before,”
said
Cyrus
de
la
Rubia,
chief
economist
at
Hamburg
Commercial
Bank.
“This
will
be
supportive
for
the
apparent
stance
of
the
ECB
to
cut
rates
at
the
meeting
on
June
6.
However,
the
better
inflation
outlook
will
be
most
probably
not
be
enough
for
the
central
bank
to
announce
that
further
rate
cuts
will
follow.”
The
ECB
has
all
but
promised
a
rate
cut
on
June
6
and
recently
ECB’s
president,
Christine
Lagarde,
said
she
is
“really
confident”
that
eurozone
inflation
is
under
control.
Other
ECB
policymakers
have
sent
strong
signals
for
several
months.
On
May
22,
Finnish
bank
governor
and
member
of
the
ECB’s
governing
council
Olli
Rehn,
told
AFP
that
the
ECB
can
start
cuts
before
the
Federal
Reserve.
Eurozone
Wages
Increase
are
a
Warning
for
the
ECB
However,
an
acceleration
of
wages
could
weigh
on
future
ECB
decisions.
Germany
wage’s
data,
published
on
May
22
by
Bundesbank,
showed
an
increase
at
the
fastest
pace
for
almost
a
decade.
Today’s
figures
for
the
overall
eurozone
signalled
that
wage
growth
picked
up
in
the
first
quarter.
According
to
the
ECB,
the
negotiated
wages
in
the
euro
area
increased
4.7%
from
a
year
ago.
This
could
put
a
setback
on
the
pace
of
rate
cuts,
as
wage
pressures
are
a
key
data
for
ECB
officials.
“The
direction
of
nominal
wage
growth
will
be
crucial
in
understanding
not
so
much
when
the
first
cut
will
occur
(which
we
now
know
with
some
certainty),
but
what
the
path
of
cuts
will
look
like
in
the
future,”
said
George
Curtis,
portfolio
manager
at
TwentyFour
Asset
management.
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