Eurozone PMI weaker than expected

Manufacturing sector for the 19-nation region loses steam in May, while core growth struggles

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Data may disappoint the European Central Bank (ECB) as a survey of businesses showed on Monday that factory output for May was weaker than previously expected amid difficulties faced by the eurozone's core countries.

Markit's final May manufacturing Purchasing Managers Index (PMI) for the 19-nation region increased to 52.2 from 52 in April. The data was also above the key 50 mark, a measure that divides expansion from contraction, thus, it was still below the preliminary flash reading of 52.3.

The ECB’s main objective is to maintain the eurozone's price stability through its monetary policy. They also aim to keep inflation rates close to 2 percent over the medium term. However, they have recently been struggling to get inflation closer to its target.

Therefore, the data released by the survey is likely to distress the ECB as factories also held prices in May after raising them for the first time in eight months, in April.  

In order to stimulate the economy and curb deflation, the ECB took new policy measures, buying 60 billion euros a month of  mainly government bonds in March. Upon this, the survey notes that progress is on the way.

TRTWorld and agencies