At 47.7, the final Markit Eurozone PMI® Composite Output Index was in line with its earlier flash estimate and above April’s 46.9.


Germany edged out of contraction territory in May, as an improvement in its manufacturing sector offset a slight decrease in service sector business activity. Although the downturns in France, Spain and Italy all remained marked, rates of contraction eased to a five-month low in France, 23-month low in Spain and stabilised in Italy.

The outlook for eurozone output is likely to be impacted by the ongoing deterioration in new order inflows, as new business contracted for the twenty-second successive month. Service sector new business fell at a sharper pace than the prior month, whereas the downturn in manufacturing new orders moderated to a slight pace.

New order inflows declined across the big-four eurozone nations. Rates of decline eased sharply in Spain, moderated in Germany and France, but gathered pace in Italy.

Job losses were reported for the seventeenth successive month during May. This reflected payroll numbers falling further in France, Italy and Spain, and declining for the first time in four months in Germany. Spare capacity remained available despite job losses, as signalled by further depletion of backlogs of work.

(…) manufacturers and service providers reporting broadly similar solid rates of decrease. Marked price discounting was seen in France, Italy and Spain, whereas charges where little-changed over the month in Germany.

The downturn in the eurozone service sector remained solid in May, despite easing for the second month running. At 47.2, up from 47.0 in
April, the Services Business Activity Index was below its earlier flash estimate of 47.5 and has now signalled contraction for 16 consecutive months.

Services output fell across the big-four eurozone nations in May. The contraction in Germany remained only marginal, while the rate of decline in Spain eased sharply to a 23-month low. Italy was the only nation to report a faster contraction of business activity, although its downturn was still less marked than that seen in France.

Service providers reported that any effort to raise business activity was being stymied by the ongoing decline in incoming new business, as new work inflows deteriorated at an accelerated pace in May. Rates of decline gathered pace in France and Italy, but eased in Germany and Spain.

May data signalled the sharpest rate of job losses in the eurozone service sector for three months, continuing a sequence of falling employment that began at the start of 2012. Further solid reductions in payroll numbers were reported by France, Italy and Spain, while employment in Germany fell for the first time in six months.


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