Euro area manufacturing PMIs decline

Euro area final manufacturing PMIs were slightly revised down from the flash estimate at 52.2 (-0.1 point), matching March's 10 month high. An upward revision to new orders was more than offset by downward revisions in output and employment components. Overall in May, new orders bounced back to 52.7 (+0.9 point), the highest in just over a year. Such a rise was supported by improving economic conditions, as well as by demand from abroad, spurred by euro weakness. 

Currency depreciation and the rebound in oil prices also led to a significant rise in input costs (+3.7 points to 56.0) but manufacturers seemed to have absorbed much of this burden as output prices remained broadly unchanged at 50.0. Today's data signaled that the manufacturing activity recovery remains on track (the PMI average for Q2 so far is the highest since Q2 14), although divergence persists between countries. Spain and Italy enjoyed significant rises in business confidence, benefiting from the weak euro. Meanwhile, core countries disappointed, as Germany slows more than expected and France, although improving, remains stuck below the 50-threshold.