-Christian Schulz, senior European economist at Berenberg Bank
The downturn across the 17-nation economy eased slightly this month, however a dearth of new orders is raising concerns that the economy is likely to contract again. According to London-based Markit Economics, a composite index in both industries jumped to 47.7 from 46.9 in the previous month, exceeding analysts' expectations of a 47.2 reading. At the same time a gauge of manufacturing activity rose to a three-month high of 47.8 in May, while a gauge of activity at service sector improved to 47.5 up from 47.0. The report also showed that the new orders services index slipped to 45.3 from 46.2, meaning a big upturn in the next month's reading looks unlikely.
"We see the euro zone being out of recession in the third quarter," said Christian Schulz, senior European economist at Berenberg Bank in London. "We've seen improving confidence since the ECB provided a safety net, and the risk of countries having to leave the euro has decreased. Also austerity is fading."
"The ECB's quarter-point cut in interest rates seems to have done little to inspire confidence that the economy will start to pick up again," he said.
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