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HCOB's composite Purchasing Managers' Index (PMI) for the
currency union, compiled by S&P Global and seen as a good gauge
of overall economic health, rose to 52.2 in May from April's
51.7, its highest since May 2023.
Although it was a tad below a preliminary 52.3 estimate, it
remained above the 50 mark separating growth from contraction
for the third straight month.
"The spectre of recession is off the table. This is thanks to
the service sector, where the upswing has recently broadened,"
said Cyrus de la Rubia, chief economist at Hamburg Commercial
Bank. "Overall, the service sector is likely to ensure that the
euro zone will show positive growth again in the second
quarter."
The services PMI eased slightly to 53.2 last month from an
11-month high of 53.3 in April, just below the flash estimate of
53.3.
A sister survey released on Monday showed the long-running
downturn in factory activity might be turning a corner. An index
measuring manufacturing activity rose to 47.3 in May from
April's 45.7.
Improving overall demand boosted optimism about the year ahead.
The composite future output index rose to 63.1 in May, its
highest since February 2022.
The brightening outlook encouraged services firms to increase
headcount at the fastest pace in 11 months.
Meanwhile, overall price pressures eased with output prices
increasing at the slowest pace in six months. That could provide
reassurance to the European Central Bank which is widely
expected to deliver a 25-basis-point interest rate cut on
Thursday.
"Reduced inflation pressures are evident in both costs and
selling prices," de la Rubia added.
"However, the PMI price indices do not yet give the all-clear,
as they are unusually high in the context of the rather weak
economic situation."
(Reporting by Indradip Ghosh; Editing by Christina Fincher)
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