Euroland in high spirits

The Eurozone economy continues to thrive as is revealed by the purchasing manager indices released today. The comprehensive Composite Index remained unchanged in May at 56.8 points, and thus at the long-standing high of the prior month. While the index for service providers gave a little ground, the sentiment barometer for industry improved. Sentiment became rosier primarily in Germany and France, while, according to the pollsters Markit in the other EMU member states it eased slightly, albeit at a high level. The prime trend in Germany was underscored by a positive trend for the Ifo Index, too.

In Germany, according to the purchasing managers surveyed it was industry that mainly set the economic pace. The assessment of industrial output in the survey rose at a rate last seen in 2011. And the assessment of order receipts and backlogs is also at a long-standing high. So it hardly mattered that the sentiment barometer for the service sector eased. It nevertheless remained clearly in the expansion zone above the 50-percent mark. On balance, the purchasing managers indicated a greater intention to hire. In line with the good assessment of the economic situation to date, economic momentum should remain strong in the second quarter, too, and drive strong economic growth.

The French purchasing managers remained in good spirits in May. In industry sentiment ebbed slightly, at a high level. Among service sector companies, by contrast, sentiment surged again. This led to the comprehensive Composite-Index once again climbing, closing at 57.6 points or the highest level in 72 months. Another good figure for orders, albeit slightly weaker on the month, led to another improvement in hiring intentions. And when the new French President Macron in coming months starts implementing his announced structural policies, the pace of the economic recovery should accelerate.

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