Spring Boom Fuels Hiring at European Factories as ECB Looks OnBy
Purchasing Managers’ Index rose to 57 in May from 56.7
Manufacturers move focus from cost-cutting to investment
Euro-area manufacturers are hiring at a record pace as growing export and domestic demand push output to the highest level in six years.
A Purchasing Managers’ Index rose to 57 in May from 56.7 the previous month, IHS Markit said on Thursday, confirming a May 23 flash estimate. Employment jumped the most in the survey’s 20-year history and expanded in all countries covered for the first time since November.
“The euro-zone upturn is developing deeper roots as factories enjoy a spring growth spurt,” said Chris Williamson, chief business economist at IHS Markit. “Increasing numbers of companies are moving away from a focus on cost-cutting toward investing in expansion, underscoring the elevated levels of business optimism seen across the region.”
Signs that the euro-area recovery is broadening should come as welcome news for the European Central Bank as it prepares to discuss whether and how to scale back stimulus. Even so, the report showed easing inflation pressures, with growth in selling prices falling to a four-month low.
The disconnect between economic and inflationary developments was also highlighted by data published Wednesday. Consumer-price growth slowed to 1.4 percent last month, the weakest since late 2016, while unemployment unexpectedly slipped in April to the lowest level in more than eight years.
The ECB holds its next policy-setting meeting on June 8 in Tallinn.