The Strategist

Analysts: European economy shows signs of recovery

05/27/2024 - 03:17

Preliminary May data from Hamburg Commercial Bank (HCOB) and S&P Global reveal that business activity in Europe has adjusted to high interest rates and is displaying a steady recovery thanks to a modest resurgence of domestic and external demand.

After reaching a one-year high of 51.7 points in April, the Eurozone PMI composite index expanded to 52.3 points in May (numbers over 50 points imply expansion of business activity, below - its contraction).

As in previous months, the services sector made up a portion of the composite index in May. The indicator increased to 53.3 points in May, marking the fourth consecutive month of growth at the same pace as April.

The manufacturing PMI, which is still in the negative territory, increased to 47.4 points this month from 45.7 in April, the highest level in 15 months, despite the fact that the industrial indicator also rose significantly. The output sub-index increased to 49.6 points from 47.3 points the previous month, marking a 14-month high.

According to HCOB chief economist Cyrus de la Rubia's remarks on the released data, the manufacturing sector would continue to experience a downturn into the second quarter of 2024, despite the fact that European companies have all but ceased slashing output.