According to a survey report, the eurozone business activity failed to pick up as expected in the month of May. The survey results suggest that this could be due to a severe tightening of the bloc’s manufacturing sector which in turn is restraining the services industry.
The survey report released Thursday might now make policymakers more apprehensive amid the already struggling euro zone economy. Mario Draghi, President European Central Bank had expressed concern in April over garnering more support for the weakening euro zone economy situation if the situation does not improve.
Going by statistical figures, HIS Markit’sFlash Composite Purchasing Managers’ Index (PMI), believed to be an accurate indicator of the economic situation, rose only to 51.6 in May from 51.5 final reading reported last month. Also, this negligible rise falls way below the median expectation of at least 51.7 in a poll conducted by Reuters.
In the wake of Thursday’s survey results, economists from Morgan Stanley released a statement to their clients wherein they wrote, “It’s not only that current growth is brittle, as the surveys suggest,there are also downside risks to the outlook, going forward.” They further added, “We expect a dovish message at the central bank’s June meeting.”
Moreover, statistics from Germany too had earlier indicated a persistent slowdown in the euro zone business activity for the fifth consecutive month in May. The ensuing trade war between China and the US is believed to be the primary reason for the downward business growth in Europe’s largest economy.
While in Germany, the services industry failed to show confidence this month, according to a survey report by Ifo Institute on Thursday, France to seems to have come under the grip of the ongoing trade conflicts. The second-largest economy of the bloc and also the only other member of the euro zone that reported a preliminary PMI, France informed of business activity has reached the highest in six months; however, in the wake of the trade war, the country is most likely to experience only mild business growth.
