Eurozone Industry Continues Mood Boost as Manufacturing Picks Up, Services Struggle
Frankfurt am Main
European industries are showing signs of revival
Several positive signs continued to emerge for the Eurozone industry in May, marking the sector's best performance since late 2019. The manufacturing sector witnessed a three-month increase in production, while demand, previously in decline, showed stability. Employment, purchases, and inventories displayed a less severe decline compared to earlier periods. Furthermore, businesses expressed optimistic expectations for the next 12 months, reaching levels not seen since early 2022 and surpassing historical averages.
The Purchasing Managers' Index (PMI) for the manufacturing sector recorded 57.5 in May, climbing from 56.2 in April, and reaching a peak not seen since mid-2019, according to S&P Global [1]. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted, "Despite ongoing geopolitical tensions and high inflation, the manufacturing sector demonstrates remarkable resilience. The PMI suggests continued growth in the ensuing months."
The PMI for the services sector also rose to 56.2 in May, from 55.8 in April, indicating a faster expansion pace than initially thought. This is the highest level since February 2022 and surpasses the long-term average of 55.0 [1]. Williamson added, "The services sector appears to be on the path to recovery, with businesses reporting a distinct increase in new orders and a rebound in confidence. The PMI points to further growth in the coming months."
Insights
- In a broader context, the May 2025 PMI data reveal contrasting trends between the Eurozone’s manufacturing and services sectors, accompanied by ongoing challenges for the region’s economy [2].
- In the manufacturing sector, positive signs include the HCOB Eurozone Manufacturing PMI, which edged closer to the expansion threshold, a broad-based recovery across key economies, and easing inflationary pressures [2][1].
- The services sector continues to face weakness, with business activity slipping into decline, diminished confidence at its lowest level since 2022, and cooling selling price pressures [2].
- Projections indicate a sectoral shift, as the industrial sector shows signs of recovery, while the services sector remains stagnant [2]. Near-term growth is expected to be volatile and weak, with significant risks from external trade policies and unravelling export effects [2].
| Sector | PMI (May 2025) | Trend (vs April) | Sentiment/Outlook ||----------------|---------------|------------------|-----------------------------------|| Manufacturing | 57.5 | Improving | Remarkable resilience || Services | Below 56.3 | Declining | Diminished confidence || Composite | ~56.9 | Declining | Volatility and uncertainty |
[1] S&P Global Market Intelligence[2] Research by various Eurozone think tanks as collected by YappaPIA AI.
The improvement in the manufacturing sector's Purchasing Managers' Index (PMI) is a positive sign for the Eurozone business industry, as it reached a peak not seen since mid-2019, indicating continued growth in the ensuing months. Meanwhile, in the finance sector, the services PMI, while showing a faster expansion pace, has the services sector continuing to face weakness, with business activity slipping into decline and diminished confidence at its lowest level since 2022.
