THE eurozone’s services and manufacturing sectors contracted less than expected in May as firms saw the pace of decline in new orders ease, hinting the worst of a deep recession may be over, surveys showed yesterday.
Markit’s Eurozone Flash Services Purchasing Managers Index (PMI) rose to 44.7 in May from 43.8 last month, beating the consensus estimate of 44.5. It marks the third month in a row it has picked up and took it to its highest level since October.The survey, covering everything from banks to hotels, showed activity was still considerably below the 50 mark that divides growth from contraction, and comes on the heels of other improving sentiment data from across Europe.
The Flash Manufacturing PMI rose to a seven-month high of 40.5 from 36.8 in April, far outstripping the consensus of 38.4. The combined rises took the Composite index to an eight month high of 43.9 from 41.1 in April and beating the median forecast of 42.3.
Business expectations in the euro zone’s service sector rose to a 13-month high while the new business index rose to just 41.9 from 40.2, showing order levels are still declining, albeit at a slower pace.
“They are going in the right direction. The rebound is rather more than we anticipated, certainly if you look at the French and German numbers,” said Peter Dixon at Commerzbank.
FAST FACTS EUROZONE
• The eurozone economy shrank a record 2.5 per cent quarter-on-quarter in the first three months of the year.
• Economists believe the worst has passed and see the economy growing in the final quarter.