- Markit
An important economic indicator of the Euro zone's economic health dropped in May to its lowest level in 16 months despite the efforts of the ECB to boost growth and business activity in the region. The flash Eurozone PMI Composite Output Index indicated that business activity in the 19-country region slid to 52.9 in May from 53.0 in April, failing to meet analysts' expectations for an estimated 53.2. Moreover, a separate research of the bloc's factory arena showed the flash Manufacturing PMI was at 51.5 in May, compared to 51.7 seen in the previous month, while economic forecast was on 51.9. Meanwhile, conditions in the Euro zone services sector remained unchanged as the gauge came in at 53.1, the same as in April, while analysts expected a slight improvement to 53.3 in May. A level below 50.0 signals a drop from the previous month, while a level above signals an increase. Thus, the latest PMIs suggest that economic growth has slowed in the Euro area in the second quarter and that business activity remained subdued.
Moreover, earlier in the month, the European Commission lowered its forecast for economic growth across the Euro zone to a 1.8% expansion of GDP for 2016 and 2017, which is ten basis points down from the previous forecast. However, it is considered that investment is likely to pick up next year, rising to 3.8% of GDP, yet unemployment will remain high at 10.3% this year and 9.9% in 2017.
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