Eurozone growth remains resilient in May thanks to a booming service sector, S&P Global PMIs show

Economic growth in the euro zone remained resilient in May despite headwinds related to the Ukraine war, supply shortages from the Covid-19 pandemic and rising cost of living, S&P Global said on Tuesday.

The euro-zone composite purchasing managers’ index fell to 54.9 in May from 55.8 in April, according to preliminary data. This number points to an expansion in economic activity for the 15th straight month, with the growth rate slowing only slightly.

While the service sector continued to post strong growth on pent-up pandemic demand, manufacturing saw only modest expansion for the second straight month amid falling new orders, according to S&P Global.

“Although factories continue to report widespread supply shortages and reduced demand for goods amid heightened pricing pressures, pent-up demand for services will boost the economy as pandemic-related restrictions are eased,” Chris Williamson, chief operating officer at S&P Global Market Intelligence.

Both sectors continued to see solid hiring, with services posting the strongest job growth in nearly 15 years, according to S&P Global.

Goods and services prices rose at the second-highest rate ever recorded in the survey, although the inflation rate moderated slightly compared to April.

“Although there are signs that inflationary pressures may be peaking, as input cost inflation has fallen for a second straight month and reporting of supply constraints has started to become less frequent, inflationary pressures remain elevated at previously unprecedented levels,” Williamson said.

Write to Maria Martinez at Eurozone growth remains resilient in May thanks to a booming service sector, S&P Global PMIs show

Brian Lowry

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